Practical 
Garage  Accounting 

A  Complete  System  of  General 

and  Cost  Records  for 

the  Garage 


BY 

HORACE  EDWARD  HOLLISTER 

Public  Accountant  and  Auditor 


Editor  Accounting  Department 
GARAGE  EFFICIENCY 

CHICAGO 


SECOND  EDITION 


ROCKFORD,  ILLINOIS 

GARAGE  SYSTEMS  COMPANY 

1916 


COPYRIGHT  1915,  1916 

BY 

HORACE  EDWARD  HOLLISTER 


i-rrata 


86  -  8th  line,  "charge 'it  to" 

should  read  "charge  to  it". 

139  -  3rd  line,  after  the  word 

"ascertained"  insert  the  words 
"and  the  total  sales." 

140  -  9th  line,  substitute  for 

"office  volume"  the  words 
"purchases  and  expenses." 


rtance     of 

Methods 

Requisi- 

ery    Trip 

;st  way  of 
insactions, 
Paid,  Pur- 
i  Account, 
icnts. 

BILLING— 
o  Depart- 
Df  Billing. 

— L  a  b  o  r 
ne  depart- 


al    Points 
j  .  ....nal. 

VII       THE  GENERAL  JOURNAL  AND  MONTHLY 
ENTRIES — How  to  show  true  profit 
and  loss  monthly. 

5 


358846 


COPYRIGHT  1915,  I4. 

BY 
HORACE  EDWARD  HOLI 


TABLE  OF  CONTENTS 

CHAPTER 

I  INTRODUCTORY— The     Importance     of 

Better  Garage  Accounting. 

II  PRIMARY  RECORDS — Modern   Methods 

-Time  Cards — Material  Requisi- 
tions— Storage  Tags — Livery  Trip 
Tickets — Cash,  etc. 

III  THE  MODERN  JOURNAL— Best  way  of 

recording  the  six  kinds  of  transactions, 
viz. :  Cash  Received,  Cash  Paid,  Pur- 
chases on  Account,  Sales  on  Account, 
Labor  Account  and  Adjustments. 

IV  SALES  DISTRIBUTION  AND  BILLING— 

Division  of  the  Garage  into  Depart- 
ments— Optional  Methods  of  Billing. 

t   V  INTER-DEPARTMENT     SALES — Labor 

and  materials  supplied  by  one  depart- 
ment to  another. 

(V  v  I         SALES  JOURNALIZING — Special  Points 
to  be  Observed — Sales  Journal. 

VII       THE  GENERAL  JOURNAL  AND  MONTHLY 
ENTRIES — How  to  show  true  profit 
and  loss  monthly. 

5 


358846 


6  CONTENTS 

CHAPTER 

VIII  THE  GENERAL  LEDGER — Classification 

of  Assets. 

IX  THE  GENERAL  LEDGER,  CONT'D — Clas- 

sification of  Liabilities  and  Net 
Worth. 

X  EXPENSE  ACCOUNTS — Classification  of 

Garage  Expenses. 

XI  SUBSIDIARY    RECORDS— Best    form    of 

Ledger  for  Customers'  Accounts, 
Duplicate  Statement  Method,  Dupli- 
cate Billing  Method,  etc. 

XII  THE  MONTHLY  STATISTICS— What  the 

proprietor  wants  to  know. 

XIII  THE  COST  SHEET— Department   Profit 

and  Loss. 

XIV  INSTALLING  THE  SYSTEM — Instructions 

for  commencing  the  system,  step  by 
step. 

XV  DAILY   PROGRAM — To   promote   book- 

keeping efficiency. 

XVI  MONTHLY  PROGRAM — For  posting  led- 

ger and  drawing  off  statements. 

XVII  YEARLY  PROGRAM— Instructions  for 

Closing  Books. 

XVIII  SUPPLEMENTARY  FORMS  AND  RECORDS 

—Purchase     Order     System — Daily 
Business  Summary  Statements. 


PREFACE 

ONE  of  the  leading  automobile  trade  jour- 
nals that  maintains  a  carefully  corrected 
mailing  list  of  automobile  sales  agencies, 
garages,  repair  shops  and  supply  houses,  states 
that  the  changes  therein  are  in  excess  of  33  1-3 
per  cent  per  year.    Another  such  journal  states 
that  there  are  14000  yearly  changes  in  a  list  of 
some  forty  thousand. 

A  business  mortality  of  approximately  one- 
third  per  year  indicates  something  radically 
wrong.  The  first  step  toward  a  cure  is  to  diagnose 
the  disease.  The  logical  means  of  locating  the 
trouble,  in  the  trade  in  general  as  well  as  in  par- 
ticular cases,  is  better  accounting — more  accu- 
rate, more  scientific,  more  analytic — modern 
Cost  Accounting  adapted  to  the  special  needs  of 
the  retail  automobile  emporium. 

Heretofore  there  has  been  no  standard  system 
of  accounts  available  to  supply  this  undeniably 
crying  need,  such  as  the  Standard  Cost  System  of 
the  printing  trade.  To  be  sure,  in  isolated  in- 
stances, expert  accountants  have  been  employed 
to  devise  special  systems  for  particular  establish- 

7 


8  PREFACE 

ments ;  but  these  have  been  the  rare  exceptions  to 
the  general  rule. 

To  satisfy  the  growing  demand  for  such 
a  standardized  system — simple,  practical,  yet 
thorough  and  complete — was  the  ambition  that 
prompted  the  preparation  of  this  volume.  In  its 
preparation  the  technical  and  theoretical  have 
been  uniformly  made  to  give  place  to  the  prac- 
tical. 

It  is  believed  that  merely  a  limited  use  of  the 
book  as  a  reference  work  will  prove  helpful  in 
many  cases  by  suggesting  shorter  methods  and 
improved  forms  in  various  departments,  even 
though  the  complete  system  laid  down  herein  be 
not  adopted.  But  the  work  is  intended  especially 
for  the  garage  man  who  is  convinced  that  the 
foregoing  statements  concerning  the  urgent  need 
of  better  accounting  are  true,  or  who  is  willing  to 
give  the  matter  sufficient  consideration  to  be  con- 
vinced. The  complete  system  outlined  has  been 
developed  by  over  three  years  experiment  and 
improvement  in  many  different  garages.  The 
endeavor  has  been  made  through  it  to  standardize 
as  far  as  possible  the  information  of  greatest 
value  and  importance  to  the  average  garage 
owner,  and  in  general  the  forms  and  methods  for 
securing  this  information;  at  the  same  time  mak- 
ing the  system  so  flexible  as  to  be  readily  adapted 


PREFACE  9 

to  a  wide  variety  of  conditions,  in  local  business 
practice,  in  volume  of  sales,  and  in  office  person- 
nel and  equipment.  Judging  by  the  number  of 
garages  in  which  the  system  has  been  found  prac- 
ticable and  satisfactory  we  believe  this  ideal  has 
been  very  largely  attained;  and  trust  that  at  least 
this  volume  may  prove  suggestive  and  helpful  as 
a  pioneer  in  its  particular  field,  blazing  a  trail 
for  those  seeking  more  scientific  methods  and 
satisfactory  results  in  Practical  Garage  Account- 
ing. 

HORACE  EDWARD  HOLLISTER 

Rockford,  Illinois 
January,  1916 


fe 

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CHAPTER  I 
INTRODUCTORY 

INEFFICIENT  accounting  is  the  cause  of 
more  business  failures  than  all  other  causes 
combined,  not  only  because  it  overlooks  im- 
portant factors  of  profit  and  loss,  but  also  be- 
cause of  the  inaccurate  and  misleading  inform- 
ation that  it  does  supply. 

The  subject  of  better  accounting  is  one,  there- 
fore, that  is  of  immediate  and  vital  concern  to  all 
business  men,  compelled  as  they  are  to  operate 
under  very  much  more  strenuous  conditions  of 
capital  demanded,  expense  and  competition  than 
prevailed  a  generation  or  even  less  ago.  The 
subject  is  especially  important  to  the  garage  bus- 
iness because  of  the  fact  that  owing  to  its  infancy, 
principles  and  policies  that  should  govern  in 
order  to  make  it  profitable  under  normal  condi- 
tions have  not  had  time  to  be  ascertained  and  dis- 
seminated ;  and  because  from  a  variety  of  causes 
a  large  number  of  men  unfitted  for  executive 
management  have  been  attracted  to  the  garage 
line,  and  have  to  a  considerable  extent  demoral- 
ized the  business  at  the  same  time  that  they  were 
being  financially  demoralized  themselves. 

11 


12  PRACTICAL    GARAGE    ACCOUNTING 

It  has  been  the  author's  observation,  during  a 
considerable  experience  in  garage  accounting 
and  systematizing,  that  very  few  garages  have 
anything  approaching  an  adequate  accounting 
system.  When  we  consider  that  the  average  ga- 
rage sells  such  a  wide  diversity  of  merchandise  as 
new  and  used  automobiles,  storage  space,  auto- 
mobile parts  and  accessories,  tires,  labor  in  the 
car  repair  shop  and  in  the  tire  repair  shop,  in  the 
battery  department  and  on  the  wash  rack,  elec- 
tric current,  gasoline,  oils,  livery  service,  and 
often  a  few  side-lines,  we  begin  to  realize  the 
many  possibilities — in  fact  the  strong  probability 
—of  serious  and  often  disastrous  leakages  devel- 
oping. While  the  proprietor  may  suspect  that 
this,  that  or  the  other  department  is  a  "Jonah" 
that  is  sinking  his  business  ship,  he  can  only  be 
sure  which  one  it  is  and  so  be  enabled  to  take  the 
necessary  steps  to  plug  the  leak  and  pump  out  the 
water,  by  means  of  the  information  supplied  to 
him  through  a  complete  and  accurate  cost  ac- 
counting system. 

Such  a  system  of  accounts  distributes  the  cost 
of  merchandise  and  labor,  together  with  the  oper- 
ating and  other  expenses,  over  the  various  depart- 
ments of  the  business  so  that  each  will  bear  its  due 
and  proper  proportion  and  show  exactly  what 
the  product  or  sales  of  each  department  cost  for 


INTRODUCTORY  13 

the  period.  The  progressive  garage  owner  or 
manager  should  be  satisfied  with  nothing  short 
of  this.  It  is  not  sufficient  to  figure  more  or  less 
closely,  when  inventory  is  taken  at  the  end  of  the 
year,  what  has  been  made  or  lost  on  the  whole 
business  during  the  year;  it  leaves  the  proprietor 
in  the  dark  on  the  most  vitally  important  point, 
namely,  'where  the  gain  or  loss  occurred — where 
to  look  for  mistakes  or  dishonesty  on  the  part  of 
employees,  or  to  make  changes  in  business  policy 
or  methods. 

Some  few  garage  men  get  from  their  books  a 
"Profit  and  Loss  Statement"  or  a  "Business  State- 
ment" monthly;  still  fewer  divide  their  sales  and 
prime  costs  (of  merchandise  and  labor)  into  de- 
partments, and  so  get  some  idea  of  the  gross  pro- 
fits in  each.  But  the  distribution  of  the  "over- 
head" expense  to  the  several  departments,  which 
is  seldom  attempted,  often  completely  changes 
the  complexion  of  the  returns  and  shows  that  a 
supposedly  profitable  department  is  in  reality  a 
bad  loser,  or  that  one  less  profitable  but  properly 
chargeable  with  a  smaller  proportion  of  "over- 
head" is  yielding  a  much  higher  percentage  of 
net  profit. 

The  departmental  cost  records  may  be  kept  en- 
tirely separate  from  the  general  books,  in  a  Cost 
Journal  and  Ledger;  or  they  may  be  combined 


14  PRACTICAL    GARAGE    ACCOUNTING 

with  the  General  Journal  and  Ledger  accounts ; 
or,  as  in  the  system  described  in  the  following 
pages,  some  of  the  necessary  cost  accounts  may  be 
kept  in  the  General  Ledger,  and  the  depart- 
mental subdivision  of  the  operating  accounts  be 
completed  on  a  monthly  Cost  Sheet.  This  method 
we  have  found  most  convenient  and  economical 
of  time  and  money. 

The  monthly  Cost  Sheet  placed  before  the  pro- 
prietor should  merely  give  him  a  general  view  of 
his  business  from  a  different  angle  than  that  of  the 
Balance  Sheet  and  Profit  and  Loss  Statement 
drawn  from  his  General  Ledger;  precisely  as  a 
man  to  get  an  idea  of  the  size  and  proportions  of 
a  house  would  need  to  see  it  from  at  least  two 
sides. 

No  doubt  some  readers  by  this  time  may  be 
saying  to  themselves,  "That  sounds  very  desir- 
able, but  how  can  I  afford  it?"  Permit  us  to  say 
that  the  real  question  is,  "How  can  you  afford  to 
do  without  it?"  The  man  who  cries  "too  much 
red  tape,"  is  always  the  man  who  has  never  had 
a  real  Cost  System.  The  man  who  has  one  may 
always  be  open  to  suggestions  of  improvement— 
his  system  educates  him  that  way — but  it  is  never 
"too  much  bother"  to  him.  He  would  rather 
give  up  his  business  than  do  without  a  Cost  Sys- 
tem. Doing  business  in  the  dark,  after  experi- 


INTRODUCTORY  15 

encing  the  light,  would  prove  too  great  a  mental 
strain. 

As  a  matter  of  fact  the  principles  underlying 
Cost  Accounting  are  not  complicated  or  diffi- 
cult, and  a  system  may  be  built  upon  or  around 
any  good  set  of  general  accounts.  It  is  largely  a 
matter  of  a  little  extra  work  in  the  beginning  in 
laying  out  the  lines  on  which  to  proceed,  and  the 
use  of  properly  designed  forms  for  obtaining  and 
recording  the  necessary  information. 


CHAPTER  II 
PRIMARY  RECORDS 

THE  subject  of  accounting  is  invested  ,  in 
the  minds  of  many  who  have  not  given  any 
very  serious  consideration  to  it,  with  con- 
siderable mystery.  The  bookkeeper's  "balance" 
is  almost  as  wonderful  and  hard  to  understand  as 
the  balance  of  the  equilibrist  who  crosses  Niagara 
on  a  tight  rope.  Nor  have  the  multitudinous 
forms  for  various  bookkeeping  purposes,  fear- 
fully and  wonderfully  made,  with  which  the  mar- 
ket has  been  flooded  by  alleged  accountants  in  the 
employ  of  blank  book  manufacturers  and  station- 
ery houses,  tended  to  simplify  the  matter  in  the 
mind  of  the  average  person. 

As  a  matter  of  fact  there  is  no  mystery  about 
accounting.  It  is  the  process  of  recording  busi- 
ness transactions.  There  are  still  three  broadly 
marked  steps  or  stages  in  this  process,  as  there 
have  been  ever  since  the  cunning  Italians  in- 
vented the  double  entry  method — the  only  scien- 
tific system  of  accounts.  In  many  of  the  text 
books  of  schools  and  "business  colleges"  these 
three  divisions  of  bookkeeping  are  embalmed  in 
what  are  denominated  the  "Day  Book",  the 

16 


PRIMARY  RECORDS  17 

"Journal"  and  the  "Ledger."  Each  of  these  in 
modern  accounting  practice  has  changed  greatly 
in  form,  but  the  three  successive  stages  are  still 
clearly  defined.  They  are: 

1.  The  original  memoranda  of  transactions 

(Corresponding  to  the  "Day  Book") 

2.  Assembling  and  classifying  these  memoranda 

("Journalizing"). 

3.  Final  Recording  in  the  Ledger. 

To  these  three  the  writer  would  add  a  fourth, 
as  being  equally  essential  if  the  accounting  system 
is  to  be  regarded  as  a  productive  and  valuable 
part  of  the  business  establishment,  and  not  merely 
as  an  expensive  parasite,  tolerated  because  it  can- 
not be  gotten  rid  of,  but  to  be  pruned  to  the  least 
possible  dimensions.  This  fourth  stage  is: 

4.  The  Monthly  Operating  Reports  to 

the  Management 

It  has  never  dawned  upon  many  business  men 
that  their  accounting  systems  might  be  easily 
made  to  yield  them  the  very  certain  and  vital  in- 
formation about  their  business  that  they  are 
worrying  themselves  grey-headed  trying  to  guess. 

THE  MODERN  "DAY-BOOK" 

In  actual  practice  the  "Day  Book"  has  been 
almost  entirely  superseded  by  numerous  special 


18 


PRACTICAL    GARAGE    ACCOUNTING 


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PRIMARY  RECORDS  19 

forms  and  apparatus  for  the  primary  recording 
of  business  operations.  Pocket  duplicate  Order 
Books,  duplicate  and  triplicate  Billing  Machines 
and  the  Cash  Register  are  among  the  most  widely 
used.  All  of  these  can  be  adapted  to  garage  pur- 
poses and  to  the  system  outlined  herein.  A  Cash 
Register  is  especially  desirable  where  a  large 
volume  of  cash  business  is  done.  Two  forms  in 
particular  are  essential  for  garage  use,  to  take  the 
place  of  the  old-fashioned  day-book,  viz.,  a  speci- 
ally designed  Material  Requisition,  and  a  special 
garage  Time  Card;  and  several  others  will  be 
found  very  desirable  under  some  circumstances. 

Form  1 — Material  Requisition 

On  this  form  all  sales  of  materials,  and  miscel- 
laneous sales  such  as  storage  and  battery  current, 
are  to  be  entered.  For  this  purpose  a  book  of 
these  blanks  should  be  kept  for  use  in  the  stock 
room,  and  another  in  the  office.  The  forms  are 
printed  in  duplicate  and  numbered  consecutively 
and  blocked  in  books  of  100  each.  The  original 
is  to  be  torn  out,  the  duplicate  remains  in  the 
covers.  Each  form  made  out  should  show  date; 
to  whom  the  goods  were  isssued;  for  what  de- 
partment if  an  Inter-department  sale;  customer's 
name,  or  "Cash"  if  a  cash  sale;  account  charge- 
able if  not  a  sale  to  a  customer;  the  full  descrip- 


20  PRACTICAL    GARAGE    ACCOUNTING 

tion  of  the  article  or  material  issued  from  stock; 
the  selling  price;  and  total  of  sale.  It  should  be 
signed  by  the  one  upon  whose  authority  the  goods 
were  issued  from  stock.  The  numbered  duplicate 
filled  out  by  means  of  carbon  paper  at  the  time 
the  original  is  made,  supplies  a  means  of  check- 
ing up  missing  slips  and  a  record  of  the  store- 
keeper's authority  for  issuing  goods.  The  origi- 
nals of  these  Requisitions,  accumulated  during 
the  day,  should  not  later  than  the  following 
morning  be  entered  on  the  Stock  Record,  when  a 
perpetual  inventory  is  maintained;  and  at  the 
same  time  the  cost  as  shown  by  the  Stock  Record 
be  entered  on  the  Requisition.  The  Requisitions 
showing  the  day's  sales  are  then  ready  to  be  en- 
tered in  the  Sales  Journal,  or  billed  if  the  dupli- 
cate billing  system  is  used.  In  case  of  cash  sales 
where  a  Cash  Register  is  in  use  that  permits  re- 
cording details  on  the  tape  opposite  the  amount  of 
each  sale,  it  is  not  necesary  to  make  out  a  separate 
Requisition  for  each  sale.  The  tape  answers  the 
same  purpose  of  original  record  that  the  Requisi- 
tions do  in  the  case  of  charge  sales;  and  at  the 
close  of  the  day's  business,  after  the  cash  received 
on  account  has  been  entered  from  the  tape  in  the 
Cash  Received  Journal,  and  the  cash  payments 
verified  and  the  proper  entry  made  of  them,  the 
cash  sales  on  the  tape  may  be  summarized,  pre- 
ferably on  a  special  form. 


PRIMARY  RECORDS 


21 


DAILY  CASH  SALES  AN 

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Form  2— DAILY  CASH  SALES  SUMMARY 

Size  3l/2x7  inches 


Form  2 — Daily  Cash  Sales  Summary 

This  summary  is  to  be  entered  on  the  Stock  Re- 
cord in  the  same  way  that  the  Material  Requisi- 
tions are,  and  afterward  entered  on  the  Cash 
Sales  pages  of  the  Sales  Journal.  The  adding 
machine  tape  for  the  day  should  then  be  attached 
to  the  summary  and  the  two  filed  away  together. 


22 


PRACTICAL    GARAGE    ACCOUNTING 


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Form  3— TIME  CARD    (Face) 
Size  7^x4  inches 


PRIMARY   RECORDS  23 


DIRECTIONS 

Use  a  separate  card    for    every    job.      Details    must    be    given    AFTER 
EVERY  UNDERLINED  WORD  on  the  reverse  hereof,  as  follows: 

BY  —Name  of  employee. 

IN — Check  Department  in  which  work  was  done. 

FO  R— Name  of  Customer;  or  If  shop  work,  check  Item  Indicating  nature 

of  work. 
ON — Name  of  Car,  whether  Customer's  or  Company's. 

FULL  DETAILSof  work  done  must  be  Indicated,  below.  STATE 
EXACTLY  WHAT  WAS  DONE,  commencing  on  line  opposite  name 
of  part  worked  on. 

Body    ~ 

Brakes     -  *..— . .- ......... 

Carburetor    - _ - ~ — 

Cleaning   Carbon    ....  ... - ......... 

Clutch    _ . - ~ 

Cooling    System    .................     . ............... « 

Delivering    Cars - 

Dismant'g- Assemb'g     _ 

Drive  Shaft  .... 


Electrical    System    

Fenders 

Moor  <&  Run.   Bo'ards  ..._ 

Frame .. 

Gas  and  Air  System  

Grinding    Valves'  „ 

Motor    ..... ................. 

Oil  &.  Grease  

Speedometer   

Springs .....„_ , 

Steering   Connections  „ _.. 

Transmission    _ _ 

Universal    Joint    ._ 

Upholstering    &   Top 

Wheels 

Windshield    ... 


Form  3— TIME  CARD    (Back) 

Size  4x7^2  inches 


24  PRACTICAL    GARAGE    ACCOUNTING 

Form  3— Time  Card 

Time  cards  should  be  handed  in  by  each  em- 
ployee of  the  garage,  except  the  office  force, 
covering  all  the  time  for  which  he  is  paid.  A 
separate  card  should  be  made  out  for  each  job  on 
which  he  works  during  the  day,  showing  name  of 
workman,  department  in  which  work  was  done, 
customer's  name  or  name  of  the  department 
for  which  the  work  was  done,  commencing  and 
stopping  time,  and  all  necessary  details  of  work 
performed.  As  both  from  nature  of  the  work  and 
the  exigencies  of  the  business  the  workman  is 
likely  to  be  interrupted  before  the  completion  of 
any  particular  job  and  put  on  something  else,  it 
will  be  found  desirable  to  have  space  on  each 
card  for  checking  on  and  off  the  same  job  at  least 
three  times  during  the  day.  It  will  also  be  found 
a  convenience  to  have  the  usual  operations  of  the 
repair  department  in  repairing  automobiles 
listed  on  the  card  so  that  the  work  done  may  be 
indicated  by  a  check  mark  instead  of  having  to  be 
written  out  in  every  case.  A  few  lines  will  then 
afford  sufficient  space  for  all  further  details  re- 
quired. 

A  Time-Stamp,  of  which  there  are  a  number  of 
very  moderate  priced  models  on  the  market, 
will  save  its  cost  in  a  very  short  time  in  more  ac- 
curate recording  of  time  actually  put  on  cus- 


PRIMARY  RECORDS  25 

tomers'  cars.  The  usual  habit  of  guessing  at  it 
in  round  figures  is  frequently  a  cause  of  consider- 
able loss. 

From  these  cards,  turned  in  daily  at  the  office, 
the  time  of  each  workman  will  first  be  entered  on 
the  Payroll  Sheet  and  distributed  to  the  proper 
labor  account;  then  the  Productive  Labor  per- 
formed be  charged  to  the  customer  on  the  Sales 
Journal  or  duplicate  billing  form;  or  if  Inter- 
department  work,  entered  as  an  Inter-depart- 
ment sale  on  the  Journal,  or  the  time  cards  filed 
in  the  Inter-department  sale  file  for  billing  at  the 
month's  end.  Time  cards  covering  labor  for  cus- 
tomers should  be  filed  so  as  to  be  readily  referred 
to  if  any  dispute  should  arise  requiring  reference 
to  the  original  record  of  labor  performed.  This 
may  be  accomplished  by  filing  the  card  either  al- 
phabetically under  the  customer's  name,  or 
numerically,  numbering  each  card  consecutively 
with  a  numbering  machine  (which  we  consider 
preferable) ,  or  with  the  number  of  the  sales  jour- 
nal page,  or  the  invoice  number  on  which  it  is 
charged. 

Storage  Register 

For  monthly  storage  charges  it  will  be  found 
desirable  to  keep  a  Storage  Register,  showing 
owner's  name,  description  of  car,  agreed  price 
for  storage,  date  of  entry  for  storage  and  date  out. 


26 


PRACTICAL    GARAGE    ACCOUNTING 


This  record  will  lessen  the  liability  of  overlook- 
ing charges  for  storage,  besides  facilitating  the 
recording  of  this  part  of  the  business  in  other 
ways.  All  storage  charges  should  be  made  from 
the  date  of  entry  to  the  month's  end,  and  for  each 
calender  month  thereafter. 


Identification  Tig.     T?c_L!L2_i) 

B« 

IB  In 

o 

rxa                 itp  ° 

«_    4^9 

W.B.Taylor  Auto  Co. 

HM. 

IJ—  Vo 

M. 

318-20  Chestnut  St. 

OUT 

N.nML 

IN 

OCT 

(^ 

Ota 

DAT  STORAGE  RATES 

teltai 

teMMM 

4  Bonn  orlen  .2Se 

Bl^™. 

2HGHT  STORAGE 

1 

6  p.  a.  to9i.au 

P-Wigkt                                                         f    1R 

-    w-k                                           ann 

I 

J  

(M. 

| 

"    Month—  are  8.00 
"    Month-dead  6.00 

ftn 

Tin. 

— 

Tube, 

Tnh- 

•UTE   ARE  HOT   RESPONSIBLE   for 

T.^ 

»ehlel«  and  tctersories  left  witt  at  far 
tilt,  etonce  or  reptin. 

11 
12 

A.  M. 

Cw  re*dy  »i  F.  M. 

11 
12 

C^^,«  ^ 

Form  4— TRANSIENT  STORAGE  TAG 

Size  8x5  inches.     After  filling  in,  the  first  section  is  given  to 

customer  as  a  claim-check,  the  second  is  attached  to   the 

car,  and  the  third  goes  to  the  office  for  a   check  on 

the  work  to  be  done  and  the  collection  of  the 

Proper  charge 

Form  4 — Transient  Storage  Tag 

For  transient  storage  customers  a  triplicate 
Identification  Tag  such  as  we  illustrate  will  be 
found  very  convenient  and  valuable.  The  three 
sections  of  the  tag  bear  identical  numbers;  the 


PRIMARY   RECORDS  27 

left-hand  section  is  to  be  torn  off  and  handed  to 
the  customer,  to  be  retained  and  presented  when 
calling  for  his  car.  It  has  printed  on  it  the  tran- 
sient storage  rates,  to  avoid  the  possibility  of  mis- 
understandings arising,  and  any  other  advertis- 
ing or  informative  matter  desired.  Section  two, 
with  time  of  car's  arrival  indicated  by  a  single 
pencil  mark,  and  any  instructions  for  supplies  or 
repairs  desired  is  attached  to  the  car.  Section 
three  is  taken  to  the  office,  to  be  held  on  a  sticker 
file  as  a  check  against  possible  oversight  of  charge 
or  loss  of  the  garage  copy,  until  the  car  is  checked 
out. 

Form  5 — Livery  Trip  Ticket 

A  very  complete  and  convenient  form  for 
livery  or  taxi  driver's  report  is  presented  here- 
with. It  is  self-explanatory,  and  can  be  readily 
adapted  to  almost  any  circumstances.  It  fur- 
nishes the  data  for  the  proper  journal  entry  of 
charges  for  livery  service,  and  for  the  Livery 
Department  statistical  report  described  in  an- 
other chapter. 

The  original  entries  of  other  transactions  are 
usually  made  in  the  office.  The  Cash  Received  is 
rung  up  on  the  Cash  Register,  or  written  out  on 
a  duplicate  credit  memorandum  form  of  some 
kind,  and  the  Journal  (Cash  Book)  records  after- 
wards made  from  the  Cash  Register  tape  or  dup- 


28  PRACTICAL    GARAGE    ACCOUNTING 


LIVERY 

CAR. DATE 

DEST 

FOR 

ADDRESS... 


Start A.  M. 

...P.  M. 


Return A.M. 

...P.  M. 


WAITING Hrs Min. 

TOTAL  TIME..._ Hrs Min. 

SPEEDOMETER  I Return  -Miles 

READINGS  (start. ..__ Miles 

TOTAL  RUN _ Miles 

AVERAGE  PER  HOUR. Miles 

(MILE 

RATE  HOUR 

(  WAITING Per  Hr. 

Driver's  Exp.  $ Earning  $ 

Driver 

....Cash  Credit 


Form  5— LIVERY  TRIP  TICKET 

Size  3x5  inches.    One  to  be  properly  filled  out  by  the  driver  for 
every  trip  or  wait,  thus  giving  a  complete  record  of  his  time. 


PRIMARY  RECORDS  29 

licate  of  receipt  issued.  The  best  method  of  re- 
cording cash  and  check  payments  is  discussed  in 
a  later  chapter. 

The  Main  Consideration 

Whatever  the  method,  the  object  to  be  kept 
constantly  in  mind  in  providing  forms  for  pri- 
mary records  is  to  furnish  an  easy  and  quick 
means  of  getting  down  the  essential  information 
for  the  bookkeeper,  by  employees  who  are  not 
expected  to  be  clerks  and  whose  productive 
work  is  along  quite  different  lines. 

Where  a  cost  system  or  a  perpetual  inventory  is 
a  part  of  the  accounting  system,  special  provis- 
ion should  be  made  on  the  primary  record  forms 
for  noting  the  cost  of  merchandise  or  labor  sold. 
The  necessity  of  keeping  all  these  various 
features  in  view  emphasizes  the  desirability  of 
using  forms  designed  by  competent  accounting 
experts  to  secure  the  required  information  in  the 
easiest  way,  without  duplication  of  work.  These 
forms  constitute  the  foundation  for  the  account- 
ing superstructure,  and  unless  they  are  properly 
laid  out  they  are  the  cause  of  as  much  trouble  and 
dissatisfaction  with  the  whole  accounting  system 
as  a  weak  and  improperly  designed  foundation  of 
a  building  is  to  its  owners  and  tenants. 


CHAPTER  III 
THE  MODERN  JOURNAL 

THE  second  step  in  recording  transactions 
is  journalizing;  the  work  of  assembling, 
sorting  and  arranging  the  primary  memo- 
randa of  debits  and  credits,  for  the  purpose  of 
posting  to  their  final  resting  places  in  the  ledger. 
The  object  to  be  kept  in  mind  here  is  to  arrange 
for  posting  as  many  items  as  possible  in  monthly 
totals,  instead  of  each  item  separately,  as  would 
be  necessary  if  one  journal  were  used  and  a  sepa- 
rate debit  and  credit  made  for  each  item.  In 
journalizing,  there  are  six  general  divisions  into 
which  the  transactions  of  the  garage  may  first  be 
divided;  namely: 

Cash  Received 

Cash  Paid 

Purchases  on  Account 

Sales  on  Account 

Labor  Account  (Payroll) 

Adjustments 

For  any  but  the  smallest  business  it  is  desirable 
that  a  separate  form  be  used  for  journalizing  each 
of  these  six  divisions  of  transactions,  as  each  af- 
fects a  different  group  of  ledger  accounts,  and  the 

30 


THE   MODERN  JOURNAL  31 

effort  to  combine  two  or  more  of  these  divisions 
usually  results,  not  in  simplifying  but  in  compli- 
cating the  matter;  either  by  expanding  the  size  of 
the  book  to  accommodate  a  larger  number  of 
columns,  making  it  more  difficult  to  make  entries 
correctly,  as  well  as  a  more  awkward  book  to 
handle;  or  by  contracting  the  columnar  distri- 
bution and  defeating  the  very  object  of  journal- 
izing. The  books  containing  the  above  six  divis- 
ions of  the  journal  are  usually  called: 

The  Cash  Book  or  Cash  Received  Book 
The  Cash  Paid  Journal,  or  Check  Register 
The  Purchase  Journal,  or  Invoice  Register 
The  Sales  or  Sales  Distribution  Journal 
The  Payroll  Book 
The  Journal,  or  the  General  Journal 

Combination  Journal 

The  forms  for  journalizing  these  six  divisions 
of  transactions  which  are  presented  herewith  are 
designed  to  be  of  uniform  size  so  as  to  go  into  a 
single  sectional-post  binder  if  desired,  each  divis- 
sion  marked  by  a  suitably  lettered  leather-tabbed 
guide  sheet.  This  is  a  great  convenience  and  re- 
sults in  a  considerable  saving  of  time. 

Form  6 — Cash  Received  Journal 

As  the  title  indicates,  all  cash  received  should 
be  entered  in  this  journal.  Five  column  ruling  is 


32 


PRACTICAL    GARAGE    ACCOUNTING 


<  < 


<    £ 


E.§ 

o  ^ 
b. 


THE  MODERN   JOURNAL  33 

usually  quite  sufficient,  providing  space,  in  ad- 
dition to  that  for  date  and  details  of  each  entry, 
for  the  distribution  of  credit  for  amounts  re- 
ceived under  the  folowing  headings:  "General 
Ledger  Sundries,"  "Accounts  Receivable," "Cash 
Sales,"  "Discount  Deducted"  and  "Amount  Re- 
ceived." The  accuracy  of  the  work  in  this  journal, 
so  far  as  amounts  entered  are  concerned,  may  be 
verified  at  any  time  during  or  at  the  end  of  the 
month  by  footing  the  columns,  cross-footing  the 
first  three,  deducting  from  that  total  the  total  of 
the  fourth,  and  comparing  the  balance  with  the 
total  of  the  Amount  Received  column,  with 
which  it  should  agree. 

Form  7 — Cash  Paid  Journal 

This  journal  is  also  the  Check  Register,  and 
no  other  record  of  checks  issued  against  the  bank 
account  need  be  made.  Even  filling  in  a  check 
stub  is  an  unnecessary  duplication  of  work.  By 
establishing  an  Imprest  Fund,  periodically  re- 
imbursed as  described  hereinafter,  all  disburse- 
ments no  matter  how  small  or  whether  in  actual 
cash  or  by  check  can  and  should  be  distributed  to 
the  proper  general  ledger  accounts  through  this 
journal.  In  order  that  the  maximum  possible 
number  of  the  charges  for  cash  paid  during  the 
month  may  be  made  to  the  ledger  accounts  in 


34 


PRACTICAL    GARAGE    ACCOUNTING 


£ 

S 

1 
§ 

0 

2 

1 

o 

ll 

1 

1 

1 

1] 

II 

JJ  I 

[i 

.'1 

A 

y 

2 

0 

< 

t.l 

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s  « 

1 

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1 

u 

1 

8 

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si 

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f 

THE  MODERN  JOURNAL  35 

single  monthly  totals,  rather  than  in  separate 
entries  for  each  payment,  this  journal  should 
have  a  number  of  amount  columns,  from  12  to  20 
or  more,  in  addition  to  the  columns  for  date, 
payee  and  number  of  each  check  issued.  The 
first  of  the  distribution  columns,  commencing 
at  the  right  of  the  detail  columns,  should  be 
headed  "General  Ledger  Sundries",  and  in  it 
should  be  entered  all  items  affecting  accounts  not 
having  a  separate  column  provided.  The  next 
column  should  be  headed  "Accounts  Payable", 
and  in  it  should  be  entered  all  payments  on  ac- 
counts in  the  Accounts  Payable  ledger,  what- 
ever the  account  may  have  represented  origin- 
ally. The  columns  next  to  the  right  are  to  be 
headed  with  the  designation  of  the  ledger  ac- 
counts to  which  the  greatest  number  of  payments 
are  charged  during  the  month;  as,  "Payroll," 
proprietor's  personal  account,  "Parts  and  Acces- 
sories", "Office  Expense,"  etc.  The  fourth  col- 
umn from  the  right  hand  side  of  the  page  should 
be  headed  "Discount",  and  in  this  column  any 
deductions  on  account  of  cash  discounts  are  to  be 
credited.  The  amount  of  discount  in  each  case, 
deducted  from  that  of  the  gross  charge  as  entered 
in  preceding  column  or  columns,  leaves  the  net 
amount  of  check,  which  is  to  be  entered  in  the 
next  column  to  the  right,  headed  "Amount  of 


36  PRACTICAL    GARAGE    ACCOUNTING 

Check".  It  follows  that  the  book  may  be  "bal- 
anced" by  adding  together  the  footings  of  the  dis- 
tribution columns  and  deducting  the  total  of  the 
Discount  column;  the  remainder  equalling  the 
total  of  the  "Amount  of  Check"  column  if  all 
payments  have  been  distributed  in  correct  a- 
mounts  in  the  debit  columns. 

Bank  Account 

Additionally,  this  journal  as  the  most  conveni- 
ent place  contains  the  detailed  account  with  the 
depository  bank.  The  "Amount  of  Check"  col- 
umn constitutes  the  credit  side  of  the  account;  the 
next  column  to  the  right,  headed  "Deposits,"  the 
debit  side;  and  the  last  column  to  the  right  of 
each  page  or  double  page  should  show  the  "Bank 
Balance,"  which  should  be  figured  each  time 
a  check  is  issued  or  a  deposit  made.  The  three 
right  hand  columns,  therefore,  constitute  a  sub- 
sidiary detail  account  to  the  general  ledger  Cash 
account;  the  detail  of  deposits  being  shown  by 
the  Cash  Received  Journal. 

When  deposit  accounts  are  kept  with  two  or 
more  banks  it  is  suggested  that  one  be  made  the 
active  account  if  possible,  deposits  in  the  other 
banks  be  made  only  by  check  on  the  active  bank 
account,  and  the  record  of  the  few  checks  issued 
on  the  inactive  accounts  be  made  through  the 


THE  MODERN  JOURNAL  37 

general  journal.  When  funds  in  the  inactive 
accounts  are  needed  for  general  purposes,  a 
check  for  the  round  sum  to  be  transferred  should 
be  made  out,  payable  to  "Cash",  and  entered  as 
a  Cash  receipt  in  the  Cash  Received  journal,  the 
general  ledger  account  with  the  bank  drawn  on 
being  credited  in  the  General  Ledger  Sundries 
column.  This  check  will  then  be  deposited,  with 
the  other  receipts,  in  the  active  bank  account. 
If  for  any  reason  it  is  necessary  to  have  two  or 
more  active  bank  accounts,  the  simplest  way  to 
handle  the  matter  is  to  have  a  separate  section  in 
the  Cash  Paid  or  Combination  journal  for  each 
bank  account. 

Imprest  Fund 

The  maximum  amount  necessary  to  carry  in 
the  office  Cash  drawer  should  be  determined, 
this  amount  drawn  from  the  bank  and  charged  to 
Imprest  Fund;  and  no  further  entry  be  made  in 
this  account  unless  changing  conditions  make  de- 
sirable an  increase  or  decrease  of  the  fund. 

The  total  amount  of  money,  checks,  etc.,  taken 
in,  should  be  deposited  daily  in  the  bank.  All 
petty  office  expenditures,  too  small  to  be  made  by 
check,  should  be  made  from  the  Imprest  Fund; 
and  a  receipt,  preferably  on  a  special  form, 
should  be  taken  for  every  such  expenditure;  or 


38  PRACTICAL    GARAGE    ACCOUNTING 

the  voucher  may  be  initialed  by  the  one  making 
the  payment  or  approving  it.  This  voucher 
should  have  space  for  the  name  of  the  ledger  ac- 
count to  which  the  expenditure  is  ultimately  to 
be  charged.  Form  8. 


PAID  VOUCHER- 

CHICAGO  IlL    


0-K- 


RE.CEJVED     RAY^eNT     or    ABOVE    AI-IO«NTT. 


Form  8—  CASH  PAID    (IMPREST  FUND)   VOUCHER 
Size  about  4J^x3  inches. 


These  receipts  or  petty  cash  vouchers  are  to  be 
considered  as  so  much  cash,  and  should  prefer- 
ably remain  in  a  compartment  of  the  cash  drawer 
until  the  actual  cash  in  the  drawer  is  so  depleted 
as  to  make  necessary  the  reimbursement  of  the 
fund,  or  until  the  end  of  the  month.  Then  the 
vouchers  are  to  be  taken  from  the  drawer,  sorted 
among  the  various  accounts  to  which  the  expend- 
itures represented  are  to  be  charged,  and  a  check 
payable  to  "Cash,  a/c  Imprest  Fund"  drawn  for 
the  total  amount  expended.  This  check  should 


THE  MODERN  JOURNAL  39 

be  either  cashed  at  the  bank  or  from  the  day's 
deposit;  in  which  latter  case  it  is  to  be  deposited* 
in  place  of  the  cash  abstracted. 

The  entry  in  the  Cash  book  covering  the  trans- 
action should  show  the  distribution  of  the  charge 
to  the  various  accounts  for  which  the  expendi- 
tures were  made.  It  is  never  to  be  charged  to  the 
Imprest  Fund.  For  example: 


Payee 

Ch'k  No. 

Office 

Shop 

Freight 

Amount 

Cash  a/c  I.   Fund 

153 

3.46 

2.10 

2.00 

7.56 

Thus  the  amount  in  the  Cash  drawer,  includ- 
ing cash  and  vouchers,  will  always  equal  the  a- 
mount  of  the  Imprest  Fund  as  shown  by  the  led- 
ger. The  Cash  vouchers  covered  by  each  reim- 
bursement, should  be  carefully  filed  away  in  an 
envelope  marked  with  the  date  of  the  re-imburse- 
ment,  and  preserved  as  vouchers  for  the  expendi- 
ture until  the  books  are  audited  and  are  closed,  at 
least. 

By  following  this  method  all  expenditures  for 
the  month  are  distributed  through  one  journal, 
and  the  total  of  the  month's  cash  receipts  as 
shown  by  the  Cash  Received  Journal  will  be  the 
same  as  the  total  of  the  "Deposits"  column  of  the 
Cash  Paid  Journal.  The  final  deposit  for  the 
month,  containing  the  last  day's  receipts,  must 
necessarily  be  made  on  the  first  business  day  of 


40 


PRACTICAL    GARAGE    ACCOUNTING 


\ft 

is 

E 


« 


n 


M 


ii 


ij 


Y 


THE   MODERN   JOURNAL  41 

the  following  month,  but  should  be  entered  in  the 
journal  as  if  made  on  the  day  cash  was  received — 
the  last  day  of  the  month. 

Form  9 — Purchases  on  Account — Purchase  Journal 

This  journal  is  primarily  for  the  recording  of 
invoices  for  merchandise  purchased  on  Accounts 
Payable.  Entry  of  such  invoices  should  be  made 
in  this  journal  as  soon  as  goods  are  received  and 
put  into  stock,  and  the  entry  should  bear  date  not 
of  the  invoice,  but  of  the  receipt  of  merchandise. 
In  the  average  garage,  two  or  more  columns 
should  be  provided  for  distribution  of  these  mer- 
chandise purchases,  viz:  for  Parts  and  Acces- 
sories, and  Tires  and  Tubes ;  and  if  the  purchases 
during  the  month  in  other  departments  warrant 
it,  additional  columns  should  be  provided  for 
them,  such  as  New  Car  purchases,  Gasoline  and 
Oil  purchases,  etc.  Additionally  a  Miscellan- 
eous column  is  necessary  for  invoices  covering 
merchandise  purchases  for  which  a  separate  col- 
umn is  not  provided,  and  for  expense  and  other 
general  ledger  account  items.  In  the  case  of  all  a- 
mounts  entered  in  the  Miscellaneous  column,  the 
account  to  be  charged  should  be  stated  in  connec- 
tion with  creditor's  name  in  the  detail  column; 
e.  g. :  "John  Jones  &  Co., — Furniture  and  Fix- 
tures." Credit  memoranda  from  creditors,  to  be 


42  PRACTICAL    GARAGE    ACCOUNTING 

charged  to  their  Accounts  Payable,  may  also  be 
most  conveniently  entered  in  this  Journal;  but 
the  amounts  of  such  must  be  entered  in  red  ink, 
which  amounts  will  be  deducted  instead  of  ad- 
ded in  footing  the  columns. 

In  this  way  all  entries  affecting  Accounts  Pay- 
able other  than  cash  or  note  payments,  are  en- 
tered through  this  Journal.  If  desired,  a  Total 
column  may  be  added  at  the  right  hand  side  of 
the  page,  for  the  purpose  of  checking  the  addi- 
tion of  the  other  columns.  The  total  of  every  in- 
voice entered  should  be  extended  to  this  column ; 
and  the  totals  of  all  columns  cross  footed  will 
then  equal  the  grand  total  of  the  total  column. 

The  Voucher  System 

This  system  affords  some  advantages  and  has 
some  disadvantages  over  the  method  of  handling 
Accounts  Payable  and  Cash  payments  just  out- 
lined. It  avoids  the  use  of  a  Purchase  Journal, 
Cash  Paid  Journal  and  Accounts  Payable  ledger, 
substituting  therefor  a  voucher  for  each  invoice 
or  group  of  invoices  payable,  a  Voucher  Register 
and  a  Check  Register.  In  the  Voucher  Register 
the  distributions  to  General  Ledger  accounts  pro- 
vided for  in  the  Purchase  Journal  and  the  Cash 
Paid  Journal  as  before  described  are  combined; 
the  Check  Register  then  requires  only  columns 


THE  MODERN  JOURNAL 


43 


for    Vouchers    Payable,    Discount    Deducted, 
Amount  of  Check,  Deposits  and  Bank  Balance. 

Below  is  shown  a  comparison  of  the  operations 
required  under  the  two  systems  from  which  the 
reader  may  draw  his  own  conclusions  as  to  their 
respective  merits. 


Accounts   Payable   Ledger 
System 

1.  Invoices  for  Mdse.  pur- 
chases entered  in  Purchase 
Journal. 

2.  Post   to  Accts.    Payable 
Ledger  a/c. 

3.  Purchase  Journal  footed 
and     posted     to     General 
Ledger. 

4.  Current   Expense    Items 
distributed    in    Cash    Paid 
Journal. 


5.  Cash  Paid  Journal  Dis- 
tribution Footing  and 
Posting 

6.  Creditors'    Accounts    in 
one    place — more    perma- 
nent       record — especially 
advantageous    when     par- 
tial payments  are  made. 


Voucher  System 

1.  Vouchers  made  for  mdse. 
Invoices  (Typewriter) 

2.  Enter  in  Voucher  Regis- 
ter. 

3.  Voucher  Register  footed 
and  posted  to  General  Led- 
ger. 

4.  Current   Expense    Items 
Vouchered    ( Typewriter ) . 

5.  Expense     Vouchers     en- 
tered in  Voucher  Register. 

6.  Voucher   Register   Foot- 
ing and  Posting  of  Expense 
Accounts. 


7.  Unpaid  Vouchers  held  in 
separate  file  until  paid. 

8.  Paid    Vouchers   filed    a- 
way      under      consecutive 
numbers. 


44  PRACTICAL    GARAGE    ACCOUNTING 

The  writer  is  of  the  opinion  that  the  voucher 
system  is  not  suited  to  the  needs  of  the  average 
garage.  Usually  it  is  desirable  that  ledger  ac- 
counts be  kept  with  creditors  from  whom  mer- 
chandise is  purchased;  and  the  making  up  of 
vouchers  for  expense  and  other  items  paid  in 
cash  involves  an  unnecessary  amount  of  labor. 
The  time  saved  in  footing  and  posting  by  com- 
bining the  distribution  of  the  Purchase  and  Cash 
Paid  journals  is  not  so  great  as  would  at  first  ap- 
pear, as  the  accounts  most  frequently  affected  by 
the  entries  in  the  one  are  not  the  same  as  in  the 
other. 

Modification  of  Voucher  System — Optional  Method 

A  modification  of  the  Voucher  System,  how- 
ever, that  may  sometimes  be  found  preferable,  is 
as  follows:  The  Purchase  Journal,  or  Register 
of  Invoices  Payable,  distributes  all  charges  for 
cash  payments  and  accounts  payable  items  for  the 
month  in  one  place,  thus  combining  the  Cash 
Paid  and  Purchase  journals  as  before  described, 
and  corresponds  to  the  Voucher  Register.  In- 
stead of  making  up  vouchers  for  all  items  pay- 
able, all  invoices  are  to  be  entered,  as  soon  as  re- 
ceived and  approved,  in  this  Journal.  Expense 
items,  for  which  it  is  not  desired  to  open  separate 
accounts  in  the  Accounts  Payable  ledger,  may  all 


THE  MODERN  JOURNAL  45 

be  charged  to  one  Miscellaneous  account  in  that 
ledger  called  Expenses  Payable.  Correspond- 
ingly the  Check  Register  (Cash  Paid  Journal) 
will  have  but  one  debit  column — Accounts  Pay- 
able ;  two  credit  columns — Discount  and  Amount 
of  Check;  and  the  Deposits  and  Bank  Balance 
(memorandum)  columns.  Imprest  Fund  reim- 
bursements will  be  distributed  in  the  Purchase 
Journal  as  Expenses  Payable  before  check  in  re- 
imbursement is  drawn.  In  fact  the  point  to  be 
kept  in  mind  in  using  this  method  is  that  every 
expenditure,  of  'whatever  nature,  must  be  entered 
in  the  Purchase  Journal  before  being  paid — ex- 
cept petty  cash  (Imprest  Fund)  disbursements 
as  explained  above. 

Sales  Journal 

Besides  providing  for  the  entry  of  charge  sales 
to  customers  when  these  are  not  otherwise  taken 
care  of,  a  garage  sales  journal  should  show: 

Departmental  Distribution  of  Sales 
Departmental  distribution  of  Cost  of  Sales 
Departmental  distribution  of  Cash  Sales  and  Cost  of 

Sales 
Distribution  of  Inter-department  Sales  and  Cost  of 

Sales 

The  forms  and  usage  of  this  journal  will  be 
described  in  subsequent  chapters. 


46 


PRACTICAL    GARAGE    ACCOUNTING 


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THE  MODERN  JOURNAL  47 

Form  10 — The  Payroll 

The  Payroll  Sheet  or  Book  or  Summary,  how- 
ever designated,  constitutes  in  reality  a  subdivis- 
ion of  the  Journal,  as  it  accumulates  the  credit  to 
Payroll  account  in  the  general  ledger,  of  the  a- 
mount  of  wages  due  employees  for  the  current 
wage  period;  and  distributes  the  charge  for 
wages  due  between  Productive  Labor  and  Non- 
Productive  Labor  for  posting  to  these  accounts 
in  the  general  ledger,  and  among  the  various  de- 
partments for  use  in  compiling  the  monthly  Cost 
Sheet 

The  form  suggested  for  the  Payroll,  as  illus- 
trated (Form  10),  provides  also  for  the  distri- 
bution of  the  time  as  between  Productive  and 
Non-Productive  Labor,  and  over  the  various  de- 
partments. For  convenience  the  departments 
are  designated  on  this  standard  form  by  letters  of 
the  alphabet.  These  sales  departments  and  their 
letter  symbols  will  be  found  listed  in  the  follow- 
ing chapter. 

Adjustments — General  Journal 

All  entries  in  the  General  Ledger  which  can- 
not properly  be  entered  in  one  of  the  five  journals 
before  described,  should  be  journalized  in  the 
General  Journal — never  directly  entered  in 
the  Ledger  accounts  affected,  with  out  journaliz- 
ing. The  form  and  use  of  this  journal  also  will 
be  detailed  in  following  chapters. 


CHAPTER  IV 
SALES  DISTRIBUTION  AND  BILLING 

THE  function  of  the  Sales  Journal,  as  out- 
lined in  the  preceding  chapter,  is  to  list 
the  month's  sales  and  cost  of  labor  and  mer- 
chandise sold,  under  the  various  department 
headings  in  a  convenient  manner  for  summariz- 
ing, that  the  totals  may  be  posted  to  the  proper 
general  ledger  accounts  and  be  available  for  use 
in  compiling  the  monthly  Cost  Sheet.  Addition- 
ally, the  charges  to  the  Accounts  Receivable 
(Customer's)  ledger  are  posted  from  this  jour- 
nal if  a  duplicate  billing  method,  supplying  a 
posting  copy  of  invoice,  is  not  employed. 

Forms  11  and  12 — The  Sales  Journal 

The  following  department  division  of  the  gar- 
age represents  a  great  deal  of  study,  experience 
and  consultation  with  representative  and  pro- 
gressive garage  men.  We  believe  it  will  be  found 
to  be  close  to  a  standard  scheme  of  sub-division 
for  the  average  garage,  both  theoretically  and 
practically.  There  are  sound  reasons  for  cons- 

48 


SALES  DISTRIBUTION  AND  BILLING  49 

tituting  each  of  these  separate  departments,  based 
on  diversity  of  commodity  handled,  or  methods 
of  handling;  or  upon  prices  charged  for  service 
or  merchandise;  or  in  general  the  information 
needed  by  the  manager,  as  will  become  more  ap- 
parent in  studying  the  information  supplied  by 
the  monthly  Cost  Sheet.  A  still  finer  sub-divis- 
ion may  be  desired  by  some,  as  for  instance,  when 
two  or  more  New  Car  agencies  are  handled;  or 
a  separation  of  Parts  and  Accessories.  Whether 
the  latter  separation  would  really  be  better  or  not 
would  depend  on  whether  the  two  lines  were 
handled  in  the  same  stock  or  store  room,  and  by 
the  same  set  of  employees,  or  not.  Similarly, 
whether  Oils  and  Grease  should  be  combined 
with  Parts  and  Accessories  department,  or  with 
Gasoline,  or  constitute  a  separate  department, 
would  depend  on  how,  where  and  by  whom  these 
items  are  handled.  Our  preference  is  usually  to 
combine  these  items  with  Parts,  Accessories  and 
Supplies,  calling  these  lines  General  Stock,  and 
keeping  separate  only  Gasoline  and  Tires  and 
Tubes  (Tire  Stock). 

The  letters  prefixed  to  department  names  in 
the  following  list  are  suggested  for  use  as  depart- 
ment symbols  on  the  Payroll  Sheet  and  elsewhere. 


50 


PRACTICAL    GARAGE    ACCOUNTING 


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SALES  DISTRIBUTION  AND  BILLING 


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52  PRACTICAL    GARAGE    ACCOUNTING 

Garage  Departments 

A— New  Car 

B— Used  Car 

C — Parts  and  Accessories  (General  Stock) 

D— Tire  Stock 

E — Gasoline 

F — Live  Storage 

G — Dead  Storage 

H — Livery 

I— Wash  Rack 

J — Car  Repairs 

K — Tire  Repairs 

L — Battery 

M — Paint  Shop 

Three  optional  methods  are  recommended  for 
sales  distribution  and  billing,  the  one  selected  to 
depend  on  the  office  equipment  and  personnel. 
These  three  will  hereinafter  be  referred  to  as  the 
Duplicate  Statement  Method,  the  Duplicate  Bil- 
ling Method,  and  the  Triplicate  Billing  Method. 

Forms  13  and  14 — Duplicate  Statement  Method 

This  is  suitable  for  offices  in  which  the  book- 
keeping must  all  be  done  by  hand  because  no 
typewriter  is  available  or  the  bookkeeper  or  bil- 
ling clerk  is  not  sufficiently  skillful  in  its  use. 

The  simplest  and  most  economical  way  under 
these  circumstances,  is  to  distribute  the  sales  and 
costs  among  the  departments,  directly  on  the  cus- 
tomer's (Accounts  Receivable)  Duplicate  State- 
ment ledger  sheets,  from  the  original  records  of 
charges  as  made  on  Time  Cards,  Material  Re- 


SALES  DISTRIBUTION  AND  BILLING  53 

quisitions,  etc.  Form  13  shows  a  superior  model 
for  this  kind  of  Duplicate  Statement.  The  costs 
are  to  be  entered,  of  course,  only  on  the  office,  or 
carbon  copy.  At  the  end  of  the  month  the  charges 
for  the  month  under  each  department,  on  each 
customer's  account,  are  to  be  footed,  as  also  the 
costs  on  the  office  copy;  and  these  totals  sum- 
marized in  the  Sales  Journal,  to  obtain  the  total 
Sales  and  Costs  in  each  department.  In  this  way 
only  the  totals  of  each  department's  Costs  and 
Sales  to  each  customer  need  be  entered  in  the 
proper  column  after  the  customer's  name. 

If  this  form  of  ledger-statement  is  objection- 
able for  any  reason,  Form  14  may  be  used.  This 
form  makes  no  provision  for  department  divis- 
ion of  Sales  or  for  recording  Costs.  Hence  a 
synopsis  of  each  item  charged  to  customers  must 
be  entered  in  the  Sales  Journal  with  Cost,  from 
the  Time-Card  or  Material  Requisition  Slip 
constituting  the  original  memorandum  of  the 
charge. 

By  using  a  good  quality  of  medium  heavy 
linen  paper  for  the  Customer's  Statement  as  il- 
lustrated in  Form  14,  the  statements  may  be  made 
out  on  the  typewriter,  taking  out  from  the  ledger 
each  customer's  statement  and  duplicate  upon 
which  charges  are  to  be  entered.  This  method 
requires  considerable  care  in  handling  the  state- 
ments out  and  into  the  ledger  so  many  times  dur- 


54 


PRACTICAL    GARAGE    ACCOUNTING 


ing  the  month,  if  they  are  to  be  kept  in  a  present- 
able condition.  It  necessitates  an  excessive  a- 
mount  of  detail  distribution  in  the  Sales  Jour- 
nal, and  to  our  minds  is  unnecessarily  cumber- 
some and  awkward  when  a  typewriter  can  be 


o 


Form  13— DUPLICATE  STATEMENT  LEDGER 
COST-FINDING  FORM 

Size  11x11  inches,  with  1^4  inch  binding  margin.     This  illustrates 

customer's   copy — the   original.     For   record   duplicate 

see  Form   IZa 


SALES  DISTRIBUTION  AND  BILLING 


55 


used.  Our  preference  is  for  the  use  of  Form  13 
where  the  typewriter  is  not  available,  and  the 
daily  duplicate  or  triplicate  billing  system  if  a 
typewriter  is  used. 


o 


0= 


Form   13a— DUPLICATE   STATEMENT  LEDGER 
COST-FINDING  FORM 

Size  11x11  inches.    Posting  (duplicate)  copy,  showing  cost  columns. 


56 


PRACTICAL    GARAGE    ACCOUNTING 


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SALES  DISTRIBUTION  AND  BILLING  57 

Forms  15  and  16 — Duplicate  Billing  Method 

This  method  requires  the  use  of  a  typewriter. 
Customers'  invoices  are  made  directly  from  the 
workmen's  Time  Cards  and  the  Material  Re- 
quisition slips.  These  invoices  should  be  made 
out  daily.  By  use  of  carbon  paper  a  copy  of  each 
invoice  is  made  at  the  same  time  which  is  called 
the  "posting  copy".  The  cost  of  the  various  items 
are  entered  on  the  posting  copy  only,  at  the  time 
that  the  invoice  is  made  out.  Two  methods  of 
aligning  the  forms  so  that  the  cost  figures  shall 
not  appear  on  the  customer's  invoice  are  illus- 
trated in  Forms  15,  iSa  and  16.  The  invoices 
should  be  numbered  consecutively,  each  dupli- 
cate bearing  the  same  number  as  the  correspond- 
ing original.  The  original  or  customer's  copy 
may  be  mailed  to  customer  at  once  or  filed  until 
the  end  of  the  month  or  billing  period.  The  post- 
ing copies  should  be  placed  in  numerical  order 
in  a  post  binder  from  which  the  bookkeeper  will 
post  the  charges  to  the  Accounts  Receivable  led- 
ger. The  sales  and  cost  of  sales  will  then  be  dis- 
tributed departmentally  in  the  Sales  Journal, 
but  only  the  serial  number  and  department  totals 
of  each  invoice  need  be  entered. 

The  charges  on  repair  jobs  extending  over 
several  days  may  be  accumulated  until  the  job  is 
finished  and  then  invoiced  all  at  once.  For  the 


58 


PRACTICAL    GARAGE    ACCOUNTING 


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FIRE  PROOF  GARAGE 
DEBAKER  and  FORD  AUTOMOBII 
Eureka,  Illinois 

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SALES  DISTRIBUTION  AND  BILLING  61 

purpose  of  keeping  the  Time  Cards  and  Material 
Requisitions  on  each  job  together,  an  ordinary 
alphabetical  box  file  or  vertical  drawer  file  will 
be  found  very  convenient.  But  the  file  must  be 
cleaned  out  at  the  end  of  the  month,  and  all  un- 
completed work  invoiced  and  charged,  whether 
the  invoice  is  rendered  to  the  customer  or  not. 

Triplicate  Billing  Method 

This  varies  slightly  from  the  preceding,  being 
a  still  shorter  and  more  convenient  method  made 
possible  by  the  use  of  an  adding  and  listing  ma- 
chine, eliminating  entirely  the  use  of  the  Sales 
Journal.  It  involves  the  use  of  a  three-sheet  bil- 
ling form  for  charges  to  customers.  The  Posting 
copy  in  this  case  does  not  contain  the  cost  col- 
umns, but  is  a  duplicate  of  the  customer's 
copy.  The  third  copy,  called  the  "Cost  Copy," 
is  to  be  filed  during  the  month,  under  the  name  of 
the  department  that  is  to  be  credited  with  the  sale. 
For  this  reason  separate  invoices  must  be  made 
out  for  each  department's  sales.  At  the  end  of 
the  month  the  invoices  under  each  department 
are  to  be  added  on  the  adding  machine,  the  list 
pasted  to  the  back  of  the  last  invoice,  and  the  in- 
voices placed  all  together  in  the  department  order 
in  the  "Cost  binder"  for  the  bookkeeper  to  post 
the  month's  costs  as  shown  by  the  lists,  to  the  debit 


62 


PRACTICAL    GARAGE    ACCOUNTING 


of  Cost  of  Sales  account,  and  to  the  credit  of  the 
proper  merchandise  Stock  account,  in  the  Gen- 
eral ledger. 

The  cost  of  labor  Sales  will  be  charged  to  Pro- 
ductive Labor  account  from  the  Payroll  Sheet; 
but  the  amount  should  be  entered  in  the  Sales 
Journal  or  on  each  invoice,  and  the  items  totalled, 
including  the  cost  of  labor  charged  on  Inter-de- 
partment Sales  (See  Chapter  V)  ;  and  the  grand 
total  cost  of  labor  charged  for  be  compared  with 
the  total  of  Productive  Labor  paid  for,  with 
which  it  must  approximately  agree. 


CHAPTER  V 
INTER-DEPARTMENT  SALES 

SERVICES  rendered  by  one  department  of 
the  Garage  to  another,  or  Merchandise  is- 
sued by  one  of  the  Merchandise  departments 
-the  General  Stock  Room,  Tire  Stock  or  Gaso- 
line departments — for  use  by  another  depart- 
ment, are  to  be  charged  to  the  department  Inside 
Expense  or  other  operating  account  of  the  de- 
partment receiving  the  service,  etc.,  and  credited 
to  Inter-department  Sales  of  the  department  per- 
forming the  service.  In  the  Sales  Journal  these 
charges  are  to  be  entered  on  separate  pages  from 
those  to  customers ;  the  name  of  the  department  or 
account  to  be  charged  for  the  service  is  to  be  en- 
tered in  the  column  headed  "Customers",  and  the 
amount  of  cost  entered  in  the  proper  column  un- 
der the  heading  of  the  department  to  be  credited. 
The  costs  only  will  be  entered  during  the  month ; 
at  the  end  of  the  month  the  charge  to  the  depart- 
ment receiving  the  benefit,  for  the  month's  total, 
will  be  fixed  at  as  nearly  as  possible  the  actual  cost 
plus  "overhead".  In  commencing  a  cost  system 
it  will  be  necessary  to  estimate  the  overhead,  but 
after  the  system  has  been  in  operation  for  a  month 
the  actual  costs  as  shown  by  the  first  monthly  Cost 

63 


64 


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INTER-DEPARTMENT  SALES  65 

Sheet  will  be  the  basis  for  the  next  month's 
charges  of  Inter-department  Sales.  After  the 
system  has  been  in  operation  for  a  longer  period, 
the  average  of  the  preceding  three  or  six  months 
costs  should  in  every  case  be  used  as  a  basis  for 
these  charges. 

When  the  triplicate  billing  method  is  em- 
ployed the  Inter-department  Sales  should  be 
billed  monthly  or  oftener  on  a  special  one-sheet 
form.  (Form  17) .  Department  symbols  are  used 
in  making  out  these  forms,  and  very  little  detail 
need  be  given,  thereby  reducing  the  work  to  a 
minimum.  The  entire  month's  charges  from 
each  department  to  another  can  usually  be  writ- 
ten on  one  invoice.  The  Inter-department  sales, 
from  the  Inter-department  invoices  under  each 
department,  should  be  listed  on  the  machine,  the 
lists  plainly  marked  with  department  for  the  Cost 
Sheet  sales  analysis,  and  the  total  posted  to  the 
credit  of  Inter-department  Sales  account.  Cost 
of  Sales  are  also  to  be  listed  and  totalled  for  each 
department  separately,  the  amounts  credited  to 
the  respective  Stock  accounts  and  the  grand  total 
charged  to  Cost  of  Sales  account. 

Inter-department  Credits 

The  principal  ways  in  which  such  sales  are 
likely  to  be  made  are  listed  below,  with  a  sug- 


66  PRACTICAL    GARAGE    ACCOUNTING 

gested  basis  for  charges  until  the  average  over- 
head can  be  ascertained. 

GENERAL  STOCK  ROOM  :  The  cost  of  operating 
the  General  Stock  Room  is  handled  on  the 
monthly  Cost  Sheet  as  a  General  Expense  charge, 
the  purchasing  and  carrying  cost  being  distri- 
buted accurately  over  the  departments  through 
which  sales  of  General  Stock  are  actually  made. 
The  transfer  of  materials  or  parts  from  the  Gen- 
eral Stock  Room  to  other  departments,  such  as 
the  Car  Repair  Department,  Battery  Department, 
Paint  Shop,  Tire  Repair  Department,  etc.,  for 
sale  to  customers  in  connection  with  the  work 
done  by  those  departments,  is  not  to  be  considered 
as  Inter-department  sales  nor  entered  on  the  In- 
ter-department sales  sheets  of  the  journal.  The 
charge  to  customers  for  such  materials  or  articles 
will,  of  course,  be  entered  on  the  customers'  sales 
sheets  or  invoices  as  a  credit  to  the  department 
through  which  the  sale  was  made;  only  direct 
sales  from  General  Stock  being  credited  in  the 
General  Stock  sales  column.  But  materials  sup- 
plied from  the  General  Stock  Room,  Gasoline 
Department,  or  Tire  Department  to  other  depart- 
ments for  use  in  the  department,  are  to  be  charged 
to  that  department  as  an  Inter-department  Sale, 
credited  to  General  Stock  Sales  Department  as 
before  provided.  The  General  Stock  Room  over- 


INTER-DEPARTMENT  SALES  67 

head  may  be  estimated  at  15%  of  the  cost,  until  a 
more  accurate  rate  has  been  determined. 

CAR  REPAIR  DEPARTMENT  :  This  department  ^ 
will  frequently  perform  labor  for  the  New  Car 
Sales,  Used  Car  Sales,  and  Livery  departments, 
and  occasionally  will  furnish  workmen  to  make 
repairs  or  betterments  on  the  buildings,  especi- 
ally when  owned  by  the  proprietor  of  the  garage. 
The  labor  on  the  building  should  be  charged  at 
full  selling  price,  the  same  as  to  any  customer,  as 
the  profit  or  loss  on  the  real  estate  investment 
should  be  kept  carefully  separate  from  the  garage 
operating  accounts.  The  garage  is  charged  full 
rental,  which  is  credited  to  real  estate  income;  so 
any  work  performed  by  garage  employees  on  the 
property  should  be  charged  at  full  rates  to  the 
Real  Estate  Accounts.  For  charges  to  the  other 
garage  departments,  estimate  labor  overhead  at 
80%  until  the  actual  average  rate  is  ascertained. 

STORAGE  DEPARTMENT:  If  a  definite  part  of 
the  floor  space  is  not  set  apart  for  the  use  of  the 
New  Car  Department,  Used  Car  department  and 
Livery  department,  the  overhead  on  which  is 
charged  to  these  respective  departments  direct,  it 
will  be  necessary  to  enter  a  charge  in  the  Sales 
Journal  monthly  against  these  departments  for 
floor  space  in  the  Live  Storage  department  oc- 
cupied by  new  or  used  cars  on  hand  for  sale  or 


68  PRACTICAL    GARAGE    ACCOUNTING 

demonstrating  purposes.  It  is  suggested  that  the 
cost  price  be  estimated  at  80%  of  the  amount 
charged  customers  until  the  actual  cost  of  storage 
space  per  car  is  ascertained  for  a  three  or  six 
months  average.  If  a  service  car  is  kept,  Service 
Car  Expense  should  be  charged  with  the  space 
occupied. 

BATTERY  DEPARTMENT,  TIRE  REPAIR  DEPART- 
MENT, PAINT  SHOP  and  other  departments  fre- 
quently perform  inter-department  service,  and 
the  charge  and  credit  for  same  should  be  entered 
in  the  Sales  Journal  or  billed  as  an  Inter-depart- 
ment sale  in  the  manner  outlined  above. 

Inter-department  Charges 

The  principal  accounts  to  be  charged  with 
these  Inter-department  sales  are  as  follows : 

INSIDE  EXPENSE  :  A  separate  account  with 
this  designation  should  be  opened  for  each  de- 
partment affected,  as  "New  Car  Inside  Expense", 
"Livery  Inside  Expense,"  etc.  These  accounts 
represent  the  purchases  of  labor  and  materials 
from  other  departments  for  operating  purposes. 
The  distinction  between  this  classification  of  ex- 
pense and  the  Non-productive  labor  cost  within 
each  department  should  be  clearly  recognized. 

FREE  SERVICE:  A  Free  Service  Account 
should  be  opened  for  each  department  giving  free 


INTER-DEPARTMENT   SALES  69 

service  on  a  "policy"  basis  to  customers.  The  de- 
partment performing  the  service  should  be  cred- 
ited with  the  amount  as  an  Inter-department  sale ; 
the  department  benefiting  be  charged.  These 
charges  are  usually  to  New  Car  Free  Service; 
occasionally  to  Used  Car  Free  Service,  Livery 
Free  Service,  Storage  Free  Service,  etc.  The  de- 
partments to  be  credited  are  most  frequently  Car 
Repair  Department  (for  free  repairs  on  cars 
sold) ,  and  General  Stock  Sales  (accessories  given 
free  with  cars  sold). 

USED  CAR  STOCK:  Materials  or  labor  ex- 
pended in  the  process  of  rebuilding  or  perma- 
nent betterment  of  used  cars,  usually  by  the  Car 
Repair,  Tire  Stock  or  Battery  departments. 
Carefully  distinguish  this  classification  from  re- 
pairs or  up-keep,  which  is  a  charge  to  New  Car 
Inside  Expense,  Used  Car  Inside  Expense,  Liv- 
ery Inside  Expense,  or  Service  Car  Expense. 

REAL  ESTATE  ACCOUNT:  Labor  and  mater- 
ials furnished  by  the  garage  for  the  building,  in 
making  additions  or  other  permanent  better- 
ments. 

MAINTENANCE  OF  BUILDINGS:  Labor  or 
materials  in  making  repairs  to  the  buildings 
owned  by  the  garage  proprietor. 


T 


CHAPTER  VI 
SALES  JOURNALIZING 

HE  departments  through  which  labor  is 
usually  sold  are  as  follows : 

Car  Repair  Shop 
Tire  Repair  Shop 
Battery  Department 
Livery  Department 
Wash  Rack 
Storage  Department 
Paint  Shop 

The  departments  should  appear  in  the  order  on 
the  sales  journal  sheets  that  will  bring  those  hav- 
ing the  largest  number  of  items  nearest  the  detail 
columns.  Some  of  the  labor  costs  in  the  above 
departments  cannot  be  shown  against  each  sep- 
arate customer's  job,  but  will  have  to  be  charged 
to  the  department  in  general,  i.  e.,  to  the  process 
of  operating  the  department;  for  example,  vul- 
canizing tubes,  charging  batteries,  driving  livery 
cars,  car  washing,  care  of  cars  in  the  Live  Storage 
Department,  and  work  in  the  Paint  Shop.  In  all 
of  these  departments  it  is  customary  to  charge 
work  by  the  job  rather  than  per  hours  of  labor 

70 


SALES   JOURNALIZING  71 

performed;  and  it  is  frequently  impossible  for 
the  workman  to  keep  his  time  separate  for  each 
job.  Where  it  is  possible  it  should  be  required 
that  they  do  so;  but  particularly  in  the  Tire  Re- 
pair Shop,  Battery  department  and  Live  Storage 
department  it  is  impracticable  and  the  cost  of 
this  labor  so  far  as  it  applies  to  work  for  cus- 
tomers, should  be  charged  to  the  department  pro- 
cess on  the  Sales  Journal  Sheets;  or,  if  a  dupli- 
cate billing  system  is  used,  the  time  cards  for  de- 
partment process  work  should  be  accumulated 
during  the  month  in  a  suitable  file,  in  the  same 
way  that  Inter-department  charges  are,  and  be 
assessed  against  the  department  sales  at  the  end  of 
the  month. 

MERCHANDISE  SALES  are  made  through  the 
following  departments: 

Gasoline  and  Oil 
General  Stock 
Car  Repair  Shop 
Battery  Department 
Tire  Stock 
Tire  Repair  Shop 
New  Car 
Used  Car 
Paint  Shop 

In  some  of  the  above  departments,  notably  the 
Battery  Department,  the  Tire  Repair  Shop  and 
the  Paint  Shop,  it  will  be  necessary  to  charge 
some  of  the  merchandise  sold  to  customers  to  the 


72  PRACTICAL    GARAGE    ACCOUNTING 

general  sales  of  the  department  or  department 
process,  as  the  quantity  used  on  each  job  cannot  be 
measured  and  assessed  against  each  particular 
sale;  as  for  example,  rubber  stock  used  in  repair- 
ing tubes. 

Miscellaneous  Sales 

Miscellaneous  sales  are  sales  that  cannot  be 
classified  as  of  merchandise  or  labor.  They  usu- 
ally consist  of  Battery  Current  and  Live  and 
Dead  Storage.  Where  a  separate  meter  is  used  in 
the  Battery  department  it  is  possible  to  charge 
the  cost  of  battery  charging  to  each  particular 
job;  but  where  this  current  is  taken  through  the 
same  meter  as  that  measuring  the  current  used  for 
lighting  or  power  purposes,  a  proportion  should 
be  charged  to  Battery  department  on  the  monthly 
cost  sheet;  and  no  costs,  therefore,  will  appear 
under  this  head  on  the  sales  journal  sheet.  Simi- 
larly all  costs  on  storage  sales  in  the  Live  and 
Dead  Storage  departments  appear  on  the 
monthly  cost  sheet  as  a  part  of  overhead  expense. 

Cash  Sales 

One  sheet  in  the  Sales  Journal  should  be  de- 
voted each  month  to  an  analysis  of  cash  sales. 
The  Material  Requisitions,  or  adding  machine 
tape,  constituting  the  original  record  of  these 
sales,  should  be  analyzed  daily,  preferably  on  a 


SALES   JOURNALIZING  73 

special  form  (No.  2)  providing  columns  for  costs 
and  amounts  of  sales  in  each  department,  and 
transferred  to  the  cash  sales  sheets  of  the  Sales 
Journal  as  a  daily  total  under  each  department. 
By  thus  summarizing  on  a  separate  form  each 
day's  cash  sales  it  will  be  necessary  to  use  only  one 
line  a  day  for  their  entry  in  the  Sales  Journal,  and 
therefore  but  one  page  a  month.  Similarly,  when 
the  triplicate  billing  system  is  used  (without  the 
distributing  Sales  Journal,)  the  days  sales  in  each 
department  may  be  summarized  on  one  invoice. 
For  this  purpose  use  the  single-copy  "Interde- 
partment  Sale"  form,  (No.  17)  accumulate  these 
in  a  separate  binder  sorted  among  the  depart- 
ments, list  on  the  adding  machine  at  the  end  of 
the  month,  and  see  that  the  grand  total  balances 
with  cash  sales  receipts  as  shown  by  the  Cash  Re- 
ceived Journal. 

Sales  Journal  Summary 

If  the  Sales  Journal  is  used  a  summary  of  the 
month's  business  must  be  drawn  off.  Use  one  of 
the  Journal  sheets  for  the  purpose.  Enter  first 
the  total  of  the  customers'  sheets  under  each  de- 
partment. Next  the  totals  of  the  Cash  Sales 
sheets  should  be  brought  forward  and  added  to 
the  Charge  Sales  totals.  Beneath  these  totals  of 
sales  to  customers  should  then  be  entered  the 


74  PRACTICAL    GARAGE    ACCOUNTING 

totals  of  the  Inter-department  sales,  and  then  the 
grand  total  of  sales  under  each  department 
brought  down. 

The  totals  of  the  labor  costs  in  the  various  de- 
partments should  approximately  agree  with  the 
totals  of  the  charges  on  the  payroll  sheets  to  Pro- 
ductive Labor.  The  amount  shown  by  the  Sales 
Journal  will  be  somewhat  larger  than  the  charge 
from  the  payroll,  as  the  time  charged  on  the  Sales 
Journal  will  be  in  round  figures  and  may  to  some 
extent  overlap,  and  a  small  portion  of  the  work- 
man's time  be  charged  to  two  jobs ;  but  this  dif- 
ference should  not  aggregate  more  than  a  few 
cents  to  a  dollar  or  two — if  more  the  difference 
should  be  located  and  corrected.  If  the  payroll 
sheets,  however,  show  a  larger  amount  than  the 
Sales  Journal  it  will  indicate  that  some  of  the 
men's  time  has  not  been  properly  charged  to  cus- 
tomers or  expense  accounts  on  the  Sales  Journal, 
and  in  that  case  a  careful  check  should  be  made 
of  the  time  cards  to  discover  the  errors. 


CHAPTER  VII 

THE  GENERAL  JOURNAL  AND 
MONTHLY  ENTRIES 

THE  General  Journal  (Form  18)  is  intended 
for  such  adjusting  entries  as  cannot  prop- 
erly be  made  in  any  of  the  other  journals. 
Some  of  these  entries  are  incidental,  such  as  the 
transfer  of  balances  from  the  Accounts  Receiv- 
able to  the  Accounts  Payable  ledger,  or  the  entry 
of  new  Notes  Receivable  or  Notes  Payable,  etc. 
Other  entries  covering  accruing  expenses,  appli- 
cation of  the  month's  proportion  of  deferred 
charges  to  operations,  etc.,  should  be  made 
monthly;  and  to  facilitate  the  making  of  these 
entries  and  to  avoid  forgetting  any  of  them,  a 
schedule  or  list  should  be  kept  and  referred  to  at 
the  end  of  each  month,  as  the  basis  for  the  entries. 
Following  is  a  list  and  explanation  of  the  more 
important  and  usual  of  these  monthly  adjust- 
ments : 

Rent 

If  the  property  occupied  is  owned  by  the  gar- 
rage  a  monthly  entry  should  be  made  charging 
Rent  account  and  crediting  Real  Estate  Income 

75 


76 


PRACTICAL    GARAGE    ACCOUNTING 


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GENERAL  JOURNAL  AND  MONTHLY  ENTRIES  77 

with  a  suitable  rental  for  the  premises.  This 
should  be  as  nearly  as  possible  at  the  figure  for 
which  the  property  could  reasonably  be  expected 
to  rent  to  an  outside  party.  Business  property  is 
usually  expected  to  yield  from  8  to  10%  gross  on 
the  investment.  It  is  therefore  suggested  that,  as 
a  basis  for  the  rental  charge,  a  percentage  of  8  to 
10%  of  the  cost  of  the  property  be  fixed  as  the 
yearly  rental,  one-twelfth  being  debited  and  cred- 
ited each  month;  and  all  expenses  of  maintain- 
ing the  property  be  charged  to  suitable  real  estate 
expense  accounts,  such  as  Taxes,  Insurance,  De- 
preciation and  Maintenance.  This  will  make  it 
possible  to  show  the  garage  earnings  and  real  es- 
tate earnings  separately  and  accurately  on  the 
Balance  Sheet  and  Profit  and  Loss  statement. 


Taxes 

One-twelfth  of  the  estimated  amount  of  taxes 
on  equipment  and  stock  for  the  current  year 
should  each  month  be  charged  to  Garage  Taxes, 
and  one-twelfth  of  the  estimated  tax  on  Real  Es- 
tate be  charged  Taxes  on  Real  Estate,  and  the 
total  be  credited  to  Tax  Reserve.  When  taxes  are 
paid,  usually  the  following  year,  the  actual 
amount  will  be  charged  to  Tax  Reserve,  and  an 
adjusting  entry  may  then  be  made  debiting  or 


78  PRACTICAL    GARAGE    ACCOUNTING 

crediting  the  balance  to  the  expense  accounts  or 
to  Profit  and  Loss. 

Fire  Insurance 

An  insurance  schedule  should  be  made  up 
on  opening  the  books,  showing  all  policies  in 
force.  After  dividing  the  unexpired  premium 
on  each  policy  into  the  correct  future  months' 
proportions,  these  amounts  should  be  entered  in 
columns  headed  by  the  names  of  the  months  cov- 
ered. When  the  schedule  is  complete  it  will  be 
possible  to  foot  these  columns  and  so  ascertain 
the  total  insurance  cost  for  each  month ;  and  this 
amount  should  be  charged  to  Fire  Insurance  ac- 
count in  the  garage  expense  section,  and  to  Build- 
ing Insurance  account  in  the  real  estate  section  of 
the  ledger,  the  total  being  credited  to  Prepaid  in- 
surance. All  actual  payments  for  insurance  are 
charged  to  the  latter  account.  The  insurance 
schedule  must  be  corrected  whenever  any  new 
insurance  is  taken  out  or  old  insurance  expires  or 
is  cancelled. 

Depreciation 

All  property  of  every  nature  in  use  by  the  gar- 
rage  should  have  an  estimate  of  its  depreciation 
charged  off  on  the  books  monthly.  The  length  of 
time  that  the  building  or  equipment  may  be  ex- 
pected to  last  should  be  estimated,  and  the  cost 


GENERAL  JOURNAL  AND  MONTHLY  ENTRIES  79 

thereof  divided  by  the  number  of  years.  Divide 
this  quotient  by  12  to  ascertain  the  monthly  pro- 
portion, and  charge  this  amount  monthly  to  De- 
preciation Expense  account,  crediting  Reserve 
for  Depreciation  accounts,  one  of  which  should 
be  opened  for  each  property  (used  cars,  equip- 
ment, fixtures,  machinery  or  tools)  account. 
These  Reserve  Accounts  will  appear  on  the  Bal- 
ance Sheet  as  a  deduction  from  the  asset  account 
representing  the  property. 

A  reasonable  depreciation  on  machinery,  fur- 
niture and  fixtures  is  ten  percent  a  year;  on  small 
tools  and  used  automobiles,  twenty  percent. 

Salaries 

Salaries  of  such  officers  or  other  employees  of 
the  Company  as  are  permitted  to  have  a  drawing 
account  with  the  Company  should  be  credited 
monthly  to  their  personal  accounts  and  charged 
to  the  proper  salary  expense  accounts. 

Estimated  Bad  Debt  Loss 

A  certain  loss  on  charge  accounts  due  to  fail- 
ure to  collect,  is  inevitable.  The  probable  a- 
mount  of  this  loss  should  be  estimated  as  closely 
as  possible  on  the  basis  of  statistics  of  pre- 
vious years.  The  percentage  of  these  losses  to 
sales  should  be  calculated  or  estimated,  and  this 


80  PRACTICAL    GARAGE    ACCOUNTING 

percent  of  charge  sales  charged  to  Bad  Debt  Loss 
monthly,  being  credited  to  Reserve  for  Bad 
Debts,  which  account  appears  on  the  balance 
sheet  as  a  deduction  from  Accounts  Receivable. 
Actual  bad  debt  losses  when  ascertained  should 
be  charged  to  Reserve  for  Bad  Debts,  not  to  Bad 
Debt  Loss  account.  Reserve  for  Bad  Debts  will 
require  adjustment  periodically,  it  being  usual 
to  make  such  adjustments  at  the  close  of  each  fis- 
cal year. 


Interest 

The  exact  amount  of  interest  accruing  on  Notes 
and  Mortgages  receivable  and  payable  should  be 
entered  on  the  books  monthly.  Interest  on  Notes 
Payable  is  usually  prepaid.  If  so,  the  amount 
prepaid  should  be  shown  as  a  debit  balance  in 
Prepaid  Interest  account;  and  the  amount  accru- 
ing monthly  be  charged  to  Interest  account  and 
credited  to  Prepaid  Interest.  Interest  not  pre- 
paid on  Notes  or  Mortgages  Payable  should  be 
accrued  monthly,  charged  to  Interest  and  cred- 
ited to  Reserve  for  Interest  on  Notes  (or  Mort- 
gages) Payable.  Interest  accruing  on  Notes  Re- 
ceivable should  be  charged  to  Accrued  Interest 
on  Notes  Receivable  Account,  and  credited  to 
Interest  account,  monthly. 


GENERAL  JOURNAL  AND  MONTHLY  ENTRIES  81 

Payroll 

The  total  amount  due  to  employees  for  their 
services  each  month  should  be  charged  to  the  dif- 
ferent labor  accounts  and  credited  to  Payroll. 
Actual  payments  of  wages  or  salaries  to  employ- 
ees will  be  charged  through  the  Cash  Paid  Jour- 
nal to  Payroll  account.  The  balance  of  Payroll 
account  at  the  end  of  the  month  shows  the  amount 
due  employees  on  wages  at  that  date. 


CHAPTER  VIII 

THE  GENERAL  LEDGER- 
CLASSIFICATION  OF  ASSETS 

THIS  is  the  principal  book  of  account  of 
the  business.    It  contains  the  condensed  and 
classified  record  of  all  transactions,   and 
from  the  General  Ledger  it  should  be  possible  at 
any  time  to  draw  off  a  complete  Balance  Sheet 
without  reference  to  any  other  record. 

General  Ledger  accounts  should  not  be  opened 
at  haphazard  nor  in  alphabetical  order,  but  in  the 
order  in  which  they  appear  on  the  Balance  Sheet. 
For  this  reason  a  loose-leaf  ledger  is  much  more 
convenient  than  a  bound  book,  as  leaves  may  be 
inserted  in  the  former  in  any  section  in  which  it  is 
desired  to  open  an  account.  The  double  head 
ruling  or  old  style  form  is  better  for  this  ledger 
than  the  three-column  ruling,  for  when  the  latter 
is  used  it  is  necessary  to  show  the  credit  balances 
in  red  in  order  to  distinguish  them  from  the  debit 
balances,  and  this  is  not  convenient  and  increases 
liability  to  error  in  entering  balances,  and  in 
drawing  off  the  Trial  Balance. 

82 


THE  GENERAL   LEDGER  83 

Proper  classification  of  ledger  accounts  is  one 
of  the  most  important  features  of  scientific  ac- 
counting. The  following  list  shows  the  prefer- 
red order  in  which  the  various  classes  of  accounts 
should  appear  in  the  General  Ledger.  It  will  be 
noted  that  the  assets  are  arranged  in  order  of  their 
availability  to  a  going  business — the  "quick"  or 
"current"  assets  first,  then  the  tangible  fixed  as- 
sets, then  the  intangible,  such  as  "Good  Will". 
Similarly,  the  current  or  floating  liabilities  are 
shown  first,  then  the  fixed  liabilities,  if  any,  such 
as  long-time  bonds  or  other  obligations.  Lastly 
the  Net  Worth  Accounts  appear  in  their  proper 
order — Capital,  Surplus,  or  Partners'  Invest- 
ment accounts,  Profit  and  Loss  and  the  operating 
accounts,  such  as  Sales,  Cost  of  Sales,  Expenses, 
etc.  A  study  of  the  Balance  Sheet  and  its  prepa- 
ration will  make  more  apparent  the  desirability 
of  following  this  order. 

Assets 

(1)  Cash 

(2)  Receivables,  Accounts  and  Notes 

(3)  Deferred  Charges  to  Operations 

(4)  Merchandise  Accounts 

(5)  Equipment  Accounts 

(6)  Real  Estate 

Liabilities 

(7)  Payables,  Accounts  and  Notes 

(8)  Accrued  Future  Due  Accounts 

(9)  Liens  or  Fixed  Liabilities 


84  PRACTICAL    GARAGE    ACCOUNTING 

Net  Worth 

(10)  Capital  Stock,  or  Partners'  Investment 
Accounts 

(11)  Surplus 

(12)  Profit  and  Loss  Account 

(13)  Operating  Accounts 

(14)  Capital  Income  and  Expense  Accounts 

The  accounts  usually  appearing  under  the 
above  divisions  will  each  be  treated  briefly  in  the 
following  pages. 

Cash 

CASH  IN  BANK:  This  account  should  be 
charged  with  the  total  of  cash  on  hand,  deposited 
in  bank  or  banks  at  the  commencement  of  busi- 
ness; and  at  the  end  of  every  month  should  be 
charged  with  the  total  cash  received  and  depos- 
ited as  shown  by  the  total  of  the  Cash  Received 
Journal  entries  for  the  month.  It  is  to  be  credited 
with  the  total  of  checks  issued  as  shown  by  the 
Cash  Paid  Journal,  and  also  with  any  amounts 
charged  by  the  bank  for  which  a  check  was  not 
issued ;  entry  for  the  latter  being  made  through 
the  General  Journal.  After  posting  the  month's 
entries  the  balance  should  be  compared  with  the 
balance  shown  in  the  last  column  of  the  Cash 
Paid  Journal,  with  which  it  should  ,  of  course, 
agree. 

The  bank  balance  should  be  reconciled 
monthly  with  the  bank's  account.  Check  off  the 


CLASSIFICATION  OF  ASSETS  85 

paid  and  cancelled  checks  returned  by  the  bank 
against  the  entries  in  the  Cash  Paid  Journal; 
make  a  list  of  the  checks  not  checked  off  and 
therefore  not  paid  by  the  bank,  up  to  the  date  of 
the  bank's  balance;  add  to  the  total  of  this  list  of 
unpaid  checks  the  balance  of  Cash  in  Bank  Ac- 
count; if  the  sum  does  not  agree  with  the  balance 
on  deposit  as  shown  by  the  bank,  the  error  or 
errors  thus  indicated  should  be  located  and  cor- 
rected. Make  out  deposit  slips  in  duplicate  if 
practicable  with  the  name  of  the  person  or  com- 
pany from  which  the  check  was  received  written 
opposite  the  amount.  Each  entry  of  deposit  by  the 
bank  teller  in  the  Pass  Book  should  be  compared 
with  the  duplicate  deposit  check  retained  in  the 
office.  These  duplicate  slips  should  be  kept  on  file 
for  six  months  or  a  year  at  least.  Banks  retain 
their  copies  for  ten  years.  They  will  frequently 
be  found  very  valuable  for  reference. 

IMPREST  FUND:  The  method  of  handling 
this  fund  has  been  explained  in  connection  with 
the  description  of  the  Cash  Paid  Journal.  (Chap- 
ter III).  The  balance  of  this  account  as  it  ap- 
pears in  the  General  Ledger  should  be  the 
amount  of  the  Imprest  Fund  in  the  office  cash 
drawer,  and  should  not  change  except  when  the 
fixed  amount  of  the  fund  is  increased  or  de- 
creased. 


86  PRACTICAL    GARAGE    ACCOUNTING 

(2)     Receivables 

ACCOUNTS  RECEIVABLE:  The  balance  of  this 
account  should  at  all  times  represent  the  total  of 
the  balances  of  the  Accounts  Receivable  ledger. 
For  this  reason  it  is  called  a  "representative"  or 
"controlling"  account.  In  opening  the  books 
charge  it  with  the  total  of  all  Accounts  Receiv- 
able balances;  and  at  the  end  of  each  month 
charge  it  to  the  total  of  charge  sales  to  customers 
from  the  summary  sheets  of  the  Sales  Journal, 
and  credit  the  total  cash  received  from  customers 
from  the  Cash  Received  Journal.  This  account 
should  also  be  charged  with  any  cash  refunds  to 
customers  through  the  Cash  Paid  Journal,  and 
with  any  adjusting  entries  affecting  Accounts  Re- 
ceivable from  the  General  Journal.  Miscella- 
neous charges  to  customers  which  cannot  be  en- 
tered in  the  Sales  Journal  because  notinthenature 
of  a  sale,  are  likely  to  arise  frequently.  Charge 
for  long  distance  telephone  service,  and  for  ex- 
press, etc.,  on  parts  specially  ordered,  are  of  this 
description.  It  will  be  found  convenient  to  set 
aside  a  page  for  these  charges  each  month  in  the 
General  Journal.  The  debits  to  each  customer's 
account  are  entered  as  they  come  up,  without  mak- 
ing the  credit  entry.  At  the  end  of  the  month  the 
credits  will  be  entered  in  totals,  to  the  proper  ac- 
counts, as  Telephone  and  Telegraph,  Freight  on 
General  Stock,  Freight  on  Tire  Stock,  etc. 


CLASSIFICATION   OF   ASSETS  87 

Only  accounts  receivable  considered  good,  i.  e., 
collectible,  should  be  included  in  the  Accounts 
Receivable  ledger  and  in  this  General  Ledger  ac- 
count. 

DOUBTFUL  ACCOUNTS:  All  accounts  with 
customers  which  are  long  past  due  and  upon 
which  further  credit  has  been  denied  should  be 
separated  from  Accounts  Receivable,  the  amount 
charged  to  Doubtful  Accounts,  and  the  detail  ac- 
counts placed  in  a  separate  section  of  the  Ac- 
counts Receivable  Ledger.  In  opening  the  Gen- 
eral Ledger  the  accounts  receivable  considered 
doubtful  should  all  be  charged  to  this  account 
and  a  considerable  reserve  set  up  to  cover  possible 
losses  thereon,  say  fifty  per  cent.  This  ac- 
count should  not,  of  course,  include  any  accounts 
considered  actually  bad  or  uncollectible.  Any 
entries  of  cash  collected  on  these  accounts  or  ad- 
justments in  any  of  the  journals  will  be  posted  to 
this  account,  as  well  as  to  the  detail  account  in  the 
Doubtful  Accounts  section  of  the  Accounts  Re- 
ceivable Ledger. 

RESERVE  FOR  BAD  DEBTS:  This  is  a  contra- 
account  to  the  two  accounts  receivable  accounts 
just  described;  that  is  to  say,  it  is  contra  to  or 
against  them  because  a  reduction  of  their  value 
on  the  Balance  Sheet.  To  this  account  must  be 
credited,  in  opening  the  books,  the  amount  that  is 


88  PRACTICAL    GARAGE    ACCOUNTING 

estimated  will  be  lost  in  collecting  the  total  of  the 
Accounts  Receivable  and  Doubtful  Accounts. 
Thereafter  a  monthly  credit  to  the  account 
should  be  made  of  the  estimated  percent  of  the 
total  charge  sales  for  the  month  that  will  prove 
uncollectible,  say  one  to  three  per  cent,  which 
amount  should  be  charged  to  Bad  Debt  Loss  Ac- 
count in  the  Expense  accounts  section  of  the  Led- 
ger. The  balance  of  this  reserve  account  should 
be  adjusted  at  the  end  of  each  fiscal  year  to  con- 
form to  the  actual  percentage  of  losses  ascer- 
tained by  a  careful  check  over  the  individual  ac- 
counts. 

GUARANTEE  DEPOSITS  WITH  MANUFACTUR- 
ERS: Such  deposits  are  usually  required  from 
automobile  dealers  by  the  manufacturers.  One 
general  ledger  account  should  be  opened  in  this 
section  including  all  such  deposits,  the  amounts 
of  which,  however,  should  be  separately  spec- 
ified in  opening  the  account. 

CUMULATIVE  DISCOUNTS  ON  NEW  CARS:  A 
fixed  or  sliding  scale  of  extra  discounts,  the 
amount  depending  on  the  number  of  new  cars  sold 
during  the  season,  is  usually  a  feature  of  the  deal- 
er's contract  with  the  automobile  manufacturer. 
These  discounts  are  sometimes  payable  in  cash  or 
by  credit  memorandum  as  soon  as  earned  but 
more  often  are  accumulated  until  the  expiration 


CLASSIFICATION   OF  ASSETS  89 

of  the  yearly  contract  at  the  end  of  the  selling 
season. 

These  discounts  should  not  be  anticipated  or 
taken  into  account  until  earned,  that  is,  until  the 
number  of  cars  entitling  the  dealer  to  the  extra 
discount  have  been  bought.  As  soon  as  the  dis- 
count has  been  so  earned,  whether  payable  im- 
mediately or  at  some  future  time,  it  should  be 
taken  into  account,  the  amount  thereof  being 
charged  to  Cumulative  Discount  on  New  Cars 
account,  and  credited,  if  on  cars  already  sold,  to 
Cost  of  (New  Car)  Sales;  or,  if  on  cars  in  stock, 
to  New  Car  Stock  account.  Thereafter  in  en- 
tering Cost  of  Sales  on  New  Cars  Sold,  in  the 
Sales  Journal,  care  must  be  taken  to  use  the  new 
net  price,  deducting  the  total  discount  applying 
in  each  particular  case. 

NOTES  RECEIVABLE:  This  account  represents 
the  total  due  to  the  company  on  promissory  notes. 
Debit  entries  will  usually  be  made  to  it  from  the 
General  Journal,  credit  entries  from  the  sundry 
column  of  the  Cash  Received  Journal. 

ACCRUED  INTEREST  ON  NOTES  RECEIVABLE: 
This  account  should  represent  at  all  times  the 
amount  of  interest  accrued  to  date  on  promissory 
notes  due  to  the  company.  A  monthly  entry 
should  be  made  through  the  General  Journal 
charging  the  total  accrual  for  the  month  to  this 


90  PRACTICAL    GARAGE    ACCOUNTING 

account;  while  all  actual  payments  of  interest  on 
notes  receivable  are  to  be  credited  herein,  as  ex- 
plained in  Chapter  VII. 

(3)     Deferred  Charges  to  Operations 

PREPAID  INSURANCE:  The  amount  of  unex- 
pired  premium  on  all  insurance  policies  at  the 
opening  of  the  books  should  be  charged  to  this 
account,  and  afterward  all  actual  payments  of 
premiums.  The  monthly  proportion  of  premium 
expiring  should  be  credited  to  this  account 
through  the  General  Journal,  as  heretofore  ex- 
plained. 

PREPAID  INTEREST:  Interest  on  notes  payable 
especially  those  given  banks,  is  usually  prepaid. 
In  such  case  it  should  be  charged  to  this  account; 
the  monthly  accrual  to  be  credited  here  at  the  end 
of  each  month,  and  at  that  time  charged  to  In- 
terest Account. 

FUEL:  It  being  usual  to  purchase  several 
weeks'  or  months'  supply  of  fuel  at  a  time,  it  is 
proper  to  consider  such  purchases  as  Deferred 
Charges  to  Operations,  and  to  charge  these  pur- 
chases to  Fuel  account  as  an  asset.  At  the  end  of 
each  month  the  amount  of  fuel  consumed  should 
be  estimated  as  closely  as  possible  and  credited  to 
this  account;  at  which  time  it  is  to  be  charged  to 
Heating  expense. 


CLASSIFICATION    OF    ASSETS  91 

Other  deferred  charge  accounts  are  sometimes 
opened,  such  as  for  office  supplies,  repair  shop 
materials,  paint  shop  supplies,  etc.  If  it  is  desired 
to  carry  such  purchases  as  an  asset  until  they  are 
actually  used  in  the  business,  it  is  best  to  charge 
the  items  to  General  Stock,  (Parts  and  Acces- 
sories) and  issue  the  materials  to  the  departments 
using  them  in  quantities  necessary  for  immediate 
use  as  an  Inter-department  Sale.  Or,  if  that  is 
impracticable,  charge  purchases  to  a  deferred 
charge  account,  estimate  the  average  number  of 
months'  supply  purchased  at  a  time,  and  charge 
off  that  proportion  of  total  supply  on  hand  at  the 
end  of  each  month  to  the  proper  expense  account, 
crediting  the  deferred  charge  account.  Thus,  if 
it  is  estimated  that  the  usual  purchase  is  a  six 
months'  supply,  charge  off  one-sixth  of  the  bal- 
ance of  the  deferred  charge  accounts  to  the  oper- 
ating account  each  month. 

(4)     Merchandise  Accounts 

NEW  CAR  STOCK :  Charge  the  cost,  including 
inbound  freight,  of  all  new  cars  to  this  account; 
and  credit  the  total  cost  of  new  cars  sold  each 
month  from  the  Sales  Journal  summary  sheet. 
A  separate  New  Car  Stock  account  may  be  kept 
for  each  car  agency  had,  if  desired.  A  card  record 
of  each  new  car,  showing  cost  and  freight 


92  PRACTICAL    GARAGE    ACCOUNTING 

paid,  may  be  advantageously  kept  in  a  section  of 
the  stock  record  drawer. 

USED  CAR  STOCK:  Charge  original  cost  of 
used  cars,  whether  cash  paid  or  the  amount  al- 
lowed on  a  new  car  sale  for  the  used  car  taken  in 
trade,  to  this  account;  and  also  the  materials 
and  labor  expended  in  rebuilding  and  put- 
ting these  cars  into  salable  condition,  as  ex- 
plained elsewhere  in  this  book,  under  the  head- 
ing "Inter-department  sales."  A  separate  record 
should  be  kept  with  each  used  car  to  which 
the  same  items  that  are  charged  in  totals  to  this 
account  in  the  General  Ledger  will  be  charged  in 
detail  to  the  car  concerned.  This  record  may  be 
in  a  section  of  either  the  General  Ledger  or  the 
Accounts  Receivable  ledger,  or  on  Stock  Re- 
cord Cards ;  and  the  totals  of  the  balances  of  this 
section  should,  of  course,  at  all  times  agree  with 
the  balance  of  the  Used  Car  Stock  Account.  By 
means  of  the  detail  record  it  will  be  easy  to  ascer- 
tain immediately  upon  the  sale  of  a  used  car  just 
what  the  car  has  cost  the  company  to  date  (aside 
from  the  actual  up-keep  of  the  car,  which  is  con- 
sidered as  a  department  expense  in  demonstrating 
these  cars  to  possible  purchasers).  This  actual 
cost  is  to  be  entered  against  the  selling  price  of  the 
car  in  the  Sales  Journal,  whether  the  amount  for 
which  it  is  sold  is  greater  or  less  than  the  cost. 


CLASSIFICATION   OF   ASSETS  93 

The  total  of  these  costs  at  the  end  of  the  month 
will  be  credited  to  this  account,  and  the  items 
separately  credited  to  the  detail  account  of  each 
used  car  sold. 

RESERVE  FOR  DEPRECIATION  ON  USED  CARS: 
A  suitable  reserve  for  depreciation  should  be  set 
aside  monthly  on  all  used  cars  on  hand,  based  on 
the  estimated  average  life  of  the  cars.  It  is  ob- 
vious that  used  cars  deteriorate  rapidly  in  value, 
and  it  is  much  better  to  spread  this  loss  over  the 
period  that  the  car  is  carried  than  to  show  the 
whole  loss  at  the  time  of  selling  the  car.  The  rate 
for  this  depreciation  used  by  many  garages  is  20 
per  cent  per  year.  General  journal  entries 
should  be  made  monthly  covering  this  deprecia- 
tion, which  should  be  charged  to  Depreciation 
Expense.  Reserve  for  depreciation  on  Used  Cars 
immediately  follows  Used  Car  Stock  account  in 
the  General  Ledger,  and  appears  on  the  Balance 
Sheet  as  a  deduction  from  that  account. 

GENERAL  STOCK,  OR  PARTS  AND  ACCESSORIES: 
This  account  is  to  be  charged  with  amount  on 
hand  at  opening  books,  and  with  all  purchases  of 
parts  and  accessories  of  all  descriptions,  carried 
in  the  general  stock  room,  in  show-cases,  etc.  When 
desired  it  may,  of  course,  be  divided  into  any 
number  of  separate  accounts  covering  different 
lines.  The  cost  of  general  stock  sales,  whether 


94  PRACTICAL    GARAGE    ACCOUNTING 

made  through  the  General  Stock  Sales  depart- 
ment, the  Car  Repair  department  or  the  Battery 
department,  as  shown  by  the  monthly  summary 
sheet  of  the  Sales  Journal,  should  be  credited  to 
this  account  at  the  end  of  each  month,  so  that  the 
balance  of  the  account  after  posting  the  month's 
entries  will  show  the  cost  value  of  the  stock  of 
parts  and  accessories  on  hand. 

TIRE  STOCK:  Casings  and  tubes  are  usually 
carried  as  a  separate  stock  from  Parts  and  Ac- 
cessories, and  sometimes  where  they  are  kept  in 
a  separate  stock  room  certain  tire  accessories  are 
included  in  the  Tire  Stock  Account.  Purchases 
and  sales  in  this  stock  should  be  handled  as  di- 
rected under  General  Stock. 

GASOLINE:  Sales  of  gasoline,  because  of  the 
difference  in  the  nature  of  the  commodity  and 
method  of  handling  it,  are  accounted  for  sepa- 
rately from  General  Stock  sales.  Gasoline  is 
usually  handled  in  a  different  part  of  the  build- 
ing, and  frequently  by  a  separate  set  of  em- 
ployees. A  card  stock  record  of  gasoline  should 
be  kept,  but  it  should  be  corrected  as  frequently 
as  possible  whenever  the  actual  amount  of  stock 
on  hand  can  be  ascertained.  This  correction 
should  be  by  means  of  a  journal  entry  debiting  or 
crediting  the  stock  account;  the  contra-entry  to  be 
made  in  the  Cost  of  Sales  account. 


CLASSIFICATION   OF   ASSETS  95 

(5)     Equipment  Accounts 

An  equipment  account  should  be  opened  for 
each  department  supplied  with  permanent  equip- 
ment of  any  value.  If  it  is  desired  to  charge  small 
tool  purchases  to  an  asset  account,  it  is  better  to 
open  separate  accounts  for  such  purchases,  as  the 
depreciation  on  small  tools  is  naturally  much 
heavier  than  on  machinery  and  equipment.  It 
will  also  be  necessary  to  open  an  account  for  Of- 
fice Furniture  and  Fixtures  in  this  section;  and 
for  Service  Car,  if  one  is  kept.  Next  to  each  equip- 
ment account  a  "Reserve  for  Depreciation  on— 
account  should  be  opened,  to  be  credited  with  the 
amount  of  depreciation  set  up  each  month;  this 
Reserve  account  to  appear  as  a  deduction  from 
the  equipment  account  on  the  Balance  Sheet.  The 
equipment  accounts  should  represent  as  nearly  as 
possible  the  actual  cost  of  the  equipment  covered. 

(6)    Real  Estate 

In  this  section  open  a  separate  account  for  each 
piece  of  real  estate  owned  by  the  garage,  to  which 
charge  its  cost  price  as  well  as  the  cost  of  any  im- 
provements added  from  time  to  time.  Next  to 
each  such  account  in  the  General  Ledger,  a  "Re- 
serve for  Depreciation  on  Real  Estate"  account 
should  be  opened,  to  which  the  depreciation  on 
buildings  is  to  be  credited;  the  amount  of  which 


96 


PRACTICAL    GARAGE    ACCOUNTING 


will  be  charged  to  Depreciation  on  Real  Estate 
in  the  Capital  Income  and  Expense  section,  not  to 
the  Garage  Depreciation  (expense)  account. 

MORTGAGES  ON  REAL  ESTATE  :  An  account  re- 
presenting the  amount  of  mortgage  or  other  fixed 
liability  against  it  should  appear  in  the  General 
Ledger  next  to  each  real  estate  account,  and  be 
treated  on  the  Balance  Sheet  as  a  deduction  from 
that  account;  or  it  may  appear  as  a  Fixed  Liabil- 
ity in  Section  9  as  hereinafter  provided. 

ACCRUED  INTEREST  ON  REAL  ESTATE  MORT- 
GAGE: The  monthly  accrual  of  interest  on  the 
real  estate  liability  should  be  credited  to  this  ac- 
count, and  be  included  on  the  monthly  Balance 
Sheet  with  the  amount  of  the  mortgage  as  a  de- 
duction from  Real  Estate  Investment. 


CHAPTER  IX 

THE  GENERAL  LEDGER  —Continued. 

CLASSIFICATION  OF  LIABILITIES 

AND  NET  WORTH 

(7)     Payables 

ACCOUNTS  PAYABLE:  This  is  the  controlling 
account  of  the  Accounts  Payable  ledger,  and  in- 
cludes all  outside  current  liabilities  of  the  com- 
pany both  for  merchandise  and  for  expense. 
Net  purchases  on  account  for  the  month  are  cred- 
ited to  this  account  from  the  Purchase  Journal; 
the  total  payments  of  the  Accounts  Payable  col- 
umns are  charged  to  this  account  from  the  Cash 
Paid  Journal;  and  any  adjustments  affecting  it, 
from  the  General  Journal.  The  balance  at  the 
end  of  the  month  should  show  the  total  amount 
due  on  open  accounts  to  all  creditors  other  than 
employees,  and  should  agree  with  the  total  bal- 
ances of  the  Accounts  Payable  Ledger. 

PAYROLL:  This  account  should  show  at  the 
end  of  each  month  the  amount  due  all  garage  em- 
ployees other  than  the  members  of  the  firm  or  offi- 
cers of  the  corporation.  To  it  should  be  credited 

97 


98  PRACTICAL    GARAGE    ACCOUNTING 

at  the  end  of  each  period  the  total  of  wages 
earned;  and  all  actual  payments  to  employees 
other  than  those  excepted  above  are  to  be  charged 
to  this  account. 

OFFICERS'  OR  PARTNERS'  PERSONAL  ACCOUNTS  : 
A  separate  account  should  be  opened  with  each 
officer  of  the  company  or  partner  if  the  business 
is  a  partnership,  in  addition  to  the  investment  ac- 
count with  each.  To  each  of  these  personal  ac- 
counts is  to  be  credited  monthly  the  amount  of 
salary  due  for  the  month;  and  cash  withdrawals 
are  to  be  charged  to  these  accounts  as  they  occur. 

SUB-AGENTS'  DEPOSITS:  All  guarantee  de- 
posits by  sub-agents  are  to  be  credited  to  this  ac- 
count. 

CUSTOMERS'  DEPOSITS  :  Advance  deposits  by 
customers  on  New  Cars  ordered  for  future  de- 
livery should  be  credited  to  a  special  account  in 
the  General  Ledger,  rather  than  to  the  customers' 
accounts  in  the  Accounts  Receivable  Ledger. 

NOTES  PAYABLE  :  The  balance  of  this  account 
represents  at  all  times  the  amount  owing  by  the 
company  on  notes  payable,  other  than  those  se- 
cured by  mortgage  on  the  real  estate.  Cash  re- 
ceived for  such  notes  will,  therefore,  be  credited 
to  this  account;  and  payments  on  such  notes  are  to 
be  charged  to  it. 


GENERAL  LEDGER CLASSIFICATION  99 

ACCRUED  INTEREST  ON  NOTES  PAYABLE  :  The 
amount  of  interest  accruing  monthly  on  notes  pay- 
able upon  which  the  interest  is  not  prepaid  should 
be  credited  to  this  account  and  payments  of  such 
interest  be  here  charged.  On  the  balance  sheet 
this  account  will  appear  as  an  addition  to  the 
amount  of  notes  payable. 

(8)     Accrued  Future  Due  Accounts 

RESERVE  FOR  TAXES  :  The  estimated  accrual 
of  taxes  should  be  credited  monthly  to  this  ac- 
count and  charged  to  Taxes  (expense)  account. 
When  taxes  are  paid  the  payment  is  to  be  charged 
to  Reserve  for  Taxes,  not  to  the  expense  account. 

(9)     Liens,  or  Fixed  Liabilities 

These  include  mortgages,  bonds,  and  other 
long  time  obligations  which  are  a  direct  lien  on 
the  assets  of  the  company.  They  should  appear  at 
this  point  in  the  ledger  and  on  the  Balance  Sheet, 
unless  the  lien  is  against  some  particular  asset, 
in  which  case  the  lien  account  may  be  inserted 
next  to  the  asset  account  and  appear  on  the  Bal- 
ance Sheet  as  a  deduction  therefrom.  The  latter 
method  is  particularly  desirable  in  the  case  of  a 
mortgage  on  real  estate,  as  the  proprietor  usually 
prefers  to  regard  his  real  estate  investments  and 
liabilities  as  distinct  from  the  business,  and  to 


100  PRACTICAL    GARAGE    ACCOUNTING 

consider  the  net  amount  thereof,  or  his  equity,  as 
a  clear  asset. 

(10)     Capital  Stock  or  Partners' 
Investment  Accounts 

CAPITAL  STOCK  :  This  account  is  to  be  credited 
with  the  par  value  of  capital  stock  issued  and  to  be 
charged  with  any  capital  stock  cancelled.  This 
account  is  usually  found  only  on  the  books  of  cor- 
porations. When  Capital  Stock  is  sold  at  a  dis- 
count or  a  premium,  a  special  account  should  be 
opened  to  show  the  total  amount  of  such  dis- 
count or  premium,  as  a  deduction  from  or  an  ad- 
dition to  Capital  Stock  on  the  Balance  Sheet. 

PARTNERS'  INVESTMENT  ACCOUNTS:  In  the 
case  of  partners  an  investment  account  should  be 
opened  for  each  partner,  to  which  is  to  be  credited 
his  investment  in  the  business,  which  is  his 
proportion  of  the  Net  Worth  at  the  opening  of 
the  books.  The  Net  Worth  is  the  excess  of 
assets  over  liabilities.  Cash  withdrawn  by 
partners  on  account  of  salary,  or  advanced  as 
temporary  loans  to  the  business,  should  not  be 
handled  through  these  accounts  but  rather 
through  personal  accounts  in  the  Accounts  Re- 
ceivable or  Accounts  Payable  section  of  the  led- 
ger, depending  on  whether  the  account  shows  a 
debit  or  credit  balance.  These  investment  ac- 


GENERAL  LEDGER CLASSIFICATION  101 

counts  are  subject  to  adjustment  at  the  end  of  each 
fiscal  period,  when  the  undivided  profits  should 
be  added  to  each  partner's  investment  in  proper 
proportion,  or  the  net  deficit  on  the  year's  busi- 
ness charged,  unless  it  is  desired  to  keep  a  record 
of  the  amount  of  such  deficit  constantly  before  the 
management  by  leaving  it  in  a  Deficit  account. 

(11)    Surplus  or  Deficit  Account 

At  the  end  of  each  fiscal  period  when  a  balance 
of  undivided  profits  from  operations  remains  it 
may  be  credited  to  Surplus  account,  usually  by 
vote  of  the  board  of  directors.  On  the  balance 
sheet  the  amount  of  this  account  will  appear  as  an 
addition  to  Capital  Stock,  to  constitute  Working 
Capital. 

DEFICIT  :  This  account  is  opened  when  the  re- 
sult of  the  operations  of  preceding  fiscal  periods 
is  a  net  loss.  It  should  appear  on  the  Balance 
Sheet  as  a  deduction  from  the  Capital  Stock  or 
investment  accounts. 

(12)     Profit  and  Loss  Account 

This  account  is  primarily  a  statistical  account, 
active  only  at  the  end  of  the  fiscal  period.  As  such 
it  will  be  described  under  "Statistical  Accounts" 
further  on.  But  it  may  be  used  as  a  current  ac- 
count for  handling  extraordinary  profits  or  los- 


102  PRACTICAL    GARAGE    ACCOUNTING 

ses  not  arising  from  the  regular  operations  of  the 
business,  such  as  unrecoverable  fire  losses,  shrink- 
ages in  value  of  assets,  loss  from  accidents  or 
damage  suits;  or  from  preceding  fiscal  periods 
such  as  recoveries  from  old  debts  written  off,  in 
order  to  avoid  changing  the  amount  of  the  in- 
vestment accounts  as  shown  at  the  beginning  of 
the  period.  However,  current  losses  on  Accounts 
or  Notes  Receivable  should  not  be  charged  to 
this  account,  but  to  Reserve  for  Bad  Debts,  as 
hereinbefore  provided. 

(13)    Operating  Accounts 

SALES:  In  the  system  of  accounts  outlined  in 
this  volume  the  Monthly  Cost  Sheet  is  designed 
as  a  permanent  record  and  an  essential  part  of  the 
system.  It  is  intended  that  the  division  of  sales 
among  the  various  departments  should  be  made 
on  this  sheet,  which  should  be  filed  in  a  binder  for 
permanent  record.  When  it  is  so  used  it  is  not 
necessary  to  sub-divide  the  Sales  Account  in  the 
General  Ledger  into  department  sales  accounts, 
as  the  figures  of  each  department's  sales  are  taken 
directly  from  the  Sales  Journal  summary  sheets 
or  listed  and  added  on  the  adding  machine  from 
the  Cost  Copies  of  invoices,  and  distributed  on 
the  Monthly  Cost  Sheet.  It  is  only  necessary  to 
post  the  total  of  each  month's  sales  to  the  credit  of 
the  Sales  Account.  Adjusting  entries  from  the 


GENERAL  LEDGER CLASSIFICATION  103 

General  Journal,  affecting  the  Sales  account, 
whether  deductions  or  additions  to  sales,  should 
invariably  state  what  department's  sales  they  af- 
fect, and  this  information  should  be  noted  in  the 
Ledger  in  making  the  entry  so  that  these  addition- 
al items  may  be  properly  distributed  before  en- 
tering the  department  net  sales  on  the  Cost  Sheet. 
Only  such  items  as  are  a  direct  reduction  of  sales 
should  be  charged  to  Sales  account.  If  desired, 
supplementary  accounts  to  receive  these  entries 
may  be  opened,  such  as  Sales  Allowance  Ac- 
count, Return  Goods  Account,  etc. ;  which  ac- 
counts appear  as  a  reduction  of  Sales  account  on 
the  Balance  Sheet,  and  the  items  of  which  should 
be  deducted  from  the  proper  department's  sales 
in  entering  the  amount  thereof  on  the  Cost  Sheet 
each  month.  As  a  rule,  however,  no  specially  de- 
sirable object  will  be  attained  by  opening  these 
separate  accounts  for  sales  deductions,  which  usu- 
ally are  inconsiderable.  Our  preference  is  that 
returned  goods  be  entered  in  red  ink  in  the  Sales 
Journal,  the  amounts  to  be  deducted  instead  of 
added  in  footing  the  columns;  and  that  sales  al- 
lowances be  journalized  in  the  General  Journal 
and  charged  direct  to  Sales  account. 

INTER-DEPARTMENT  SALES:  Services  or  ma- 
terials supplied  by  one  sales  department  to  another 
should  be  credited  to  Inter-department  Sales  ac- 


104  PRACTICAL    GARAGE    ACCOUNTING 

count  through  the  Sales  Journal,  or  on  a  special 
billing  form,  as  provided  in  the  preceding  pages. 
This  account  should  appear  as  a  separate  item, 
added  to  Sales  account,  on  the  Balance  Sheet. 

COST  OF  SALES:  To  this  account  is  to  be 
charged  at  the  end  of  each  month  the  cost  of  all 
merchandise  sold  to  customers,  or  used  out  of  any 
of  the  merchandise  stock  account  by  the  garage 
during  the  month. 

PRODUCTIVE  LABOR:  Productive  Labor  is 
theoretically  defined  as  labor  that  can  be  charged 
directly  to  a  particular  job  or  process  of  manu- 
facture or  operation.  In  garage  practice,  pro- 
ductive labor  is  labor  that  is  performed  for  a  cus- 
tomer, or  in  one  department  of  the  garage  for 
some  other  department.  On  the  Balance  Sheet, 
Productive  Labor  should  be  added  to  Cost  of 
Sales  and  the  total  of  these  two  items  deducted 
from  Sales  account  to  show  the  Gross  Profit  from 
Operations. 

EXPENSE  ACCOUNTS  AND  CAPITAL  INCOME 
AND  EXPENSE  ACCOUNTS,  will  be  treated  in  a 
separate  chapter. 


CHAPTER  X 

EXPENSE  ACCOUNTS  AND 
CAPITAL  INCOME  AND  EXPENSE 

BELOW  is  a  list  of  the  usually  desirable  gar- 
age expense  accounts,  in  the  order  in 
which  they  should  appear  in  the  General 
Ledger.  They  are  grouped,  not  according  to 
departments,  but  according  to  nature  of  expense. 
In  the  case  of  expenses  which  are  paid  in  one  item 
and  are  for  the  benefit  of  the  whole  garage,  such 
as  Rent,  Light,  Heat,  etc.,  a  single  account  is 
opened,  the  departmental  distribution  being  left 
to  the  Cost  Sheet.  On  the  other  hand,  where  the 
items,  because  of  their  nature,  affect  some  partic- 
ular department  of  the  garage  only,  a  separate  ac- 
count for  that  class  of  expense  for  each  depart- 
ment should  be  opened,  in  order  to  avoid  exces- 
sive labor  in  analyzing  and  distributing  the  ex- 
pense on  the  monthly  Cost  Sheet.  Examples  of 
such  departmental  accounts  are:  Inside  Expense, 
Free  Service  and  the  direct  department  expense 
accounts.  Depreciation  is  charged  to  one  account 
as  the  distribution  may  readily  be  obtained  from 

105 


106  PRACTICAL    GARAGE    ACCOUNTING 

the  Reserve  accounts  showing  estimated  deprec- 
iation of  each  department's  equipment.  The 
reason  for  the  differing  expense  distributions  of 
the  General  Ledger  and  monthly  Cost  Sheet  is  to 
give  the  proprietor  two  different  perspectives  on 
his  expenses,  just  as  viewing  a  building  from  two 
different  angles  gives  a  better  idea  of  its  propor- 
tions than  seeing  it  from  one  side  only.  On  the 
Balance  Sheet  only  the  total  of  all  Expense  ac- 
count balances  should  be  shown,  as  a  deduction 
from  Gross  Garage  Profit  from  Operations,  leav- 
ing Net  Garage  Profit  from  Operations ;  or,  if  the 
total  expenses  are  greater  than  the  gross  garage 
profits,  then  the  subtraction  is  the  other  way  and 
the  difference  is  a  Net  Loss  on  Operations,  and 
should  be  entered  in  red  on  the  Balance  Sheet. 
A  separate  statement  of  expenses,  grouped  under 
the  different  classifications  and  compared  with 
the  expenses  for  the  preceding  month  and  the  cor- 
responding month  of  the  previous  year,  should 
accompany  the  monthly  Balance  Sheet  and 
Cost  Sheet  when  placed  before  the  proprietors  or 
executives  of  the  business. 

GARAGE  EXPENSE  ACCOUNTS 

House 

100— Rent 
101— Light 
102— Heat 


EXPENSE  ACCOUNTS  107 

Investment 

110 — Taxes — Equipment  and  Stock 

111 — Depreciation,  Equipment  and  Stock 

112 — Insurance — Equipment  and  Stock 


Operating 

120 — Non-productive  Labor 

121 — Liability  Insurance 

122    —Power 

123X— Inbound  Freight— General  Stock 

123D  —Inbound  Freight—    Tire  Stock 

124X — General  Stock  Room  Expense 

124A  — New  Car  Department  Expense 

124B  — Used  Car  Department  Expense 

124C  —General  Stock  Sales  Dept.  Expense 

124D— Tire  Stock  Dept.  Expense 

124E  — Gasoline  Department  Expense 

124F  — Live  Storage  Department  Expense 

124G — Dead  Storage  Department  Expense 

124H — Livery  Department  Expense 

1241  —Wash  Rack  Expense 

124J  — Car  Repair  Shop  Expense 

124K  — Tire  Repair  Shop  Expense 

124L  — Battery  Department  Expense 

124M — Paint  Shop  Expense 

125X — General  Stock  Room  Inside  Expense 

125 A  — New  Car  Inside  Expense 

125B  —Used  Car  Inside  Expense 

125C  —General  Stock  Sales  Inside  Expense 

125D— Tire  Stock  Inside  Expense 

125E  — Gasoline  Inside  Expense 

125F  — Live  Storage  Inside  Expense 

125G  — Dead  Storage  Inside  Expense 

125H  — Livery  Inside  Expense 

1251  — Wash  Rack  Inside  Expense 

125J  — Car  Repair  Inside  Expense 

125K  — Tire  Repair  Inside  Expense 

125L  — Battery  Inside  Expense 


108  PRACTICAL    GARAGE    ACCOUNTING 

125M — Paint  Shop  Inside  Expense 

128  — Service  Car  Expense 

129  — General  Expense 

Administrative 

130 — Administrative  Salaries 
131— Office  Salaries 
132 — Office  Expense 

Selling 

140  — Advertising  (General) 

140A — etc.        (Departmental  Advertising  Expense 
Accounts  as  needed. ) 

141  — Salesmen's  Salaries  and  Commissions 

(Separate  account  for  each  department  hav- 
ing exclusive  salesmen) 

142  — Credit  and  Collection  Expense 

143  — Estimated  Bad  Debt  Loss 

144  —Free  Service  (General) 

144  A — etc.     (Departmental  Free  Service  Accounts 
as  needed.) 

It  will  be  noted  that,  in  the  foregoing  list,  ten 
numbers  are  devoted  to  each  division  of  expense 
accounts  commencing  at  100.  Should  additional 
accounts  be  needed  they  can  be  opened  in  the 
proper  division,  assigning  an  unused  number.  If 
it  is  desired  to  number  all  the  General  Ledger  ac- 
counts the  numbers  1  to  99  may  be  used  for  the  ac- 
counts preceding  the  expense  accounts  in  the  Led- 
ger, following  a  similar  plan  of  assigning  ten 
numbers  to  each  section.  The  use  of  the  account 
number  as  a  posting  check  against  each  journal 


CAPITAL  INCOME  AND   EXPENSES  109 

item  posted  to  the  General  Ledger  will  be  found 
especially  helpful  as  a  time-saver  in  checking 
for  errors. 

The  above  arrangement  of  expense  accounts  is 
not  only  logical  but  it  greatly  facilitates  quick  re- 
ference in  posting,  etc.,  as  well  as  the  distribution 
of  expenses  on  the  Monthly  Cost  Sheet  or  Depart- 
mental Profit  and  Loss  Statement.  A  further 
analysis  of  these  accounts  will  be  given  in  connec- 
tion with  a  description  of  the  statement  referred 
to. 

% 

(14)     Capital  Income  and  Expense  Accounts 

REAL  ESTATE  INCOME  :  As  the  title  indicates 
all  income  from  Real  Estate,  including  the 
amount  charged  to  the  garage  Rent  account 
monthly,  is  to  be  credited  to  this  account.  Real 
Estate  expenses  may  be  charged  to  this  account, 
in  which  case  the  balance  of  the  account  repre- 
sents the  net  real  estate  income;  or  these  expenses 
may  be  distributed  to  a  number  of  separate  ac- 
counts, to  follow  this  one  in  the  Ledger  and  on  the 
Balance  Sheet,  the  total  of  which  accounts  will 
appear  as  a  deduction  from  Real  Estate  Income ; 
such  as : 

Maintenance  of  Buildings  (Repairs  and  up-keep) 
Depreciation  of  Buildings 
Taxes  on  Real  Estate 
Insurance  on  Buildings,  etc. 


110  PRACTICAL    GARAGE    ACCOUNTING 

INTEREST:  Interest  accruing  on  Notes  and 
Mortgages  Payable  should  be  charged  to  this  ac- 
count monthly.  Interest  accruing  on  Notes  or 
Mortgages  Receivable  is  to  be  credited  here 
monthly.  Incidental  collections  or  payments  of 
interest,  e.  g.,  on  over-due  accounts,  not  bearing 
interest  ordinarily,  may  be  debited  or  credited 
directly  to  this  account.  Actual  payments  or  col- 
lections of  interest  on  collateral  should  be  debited 
or  credited  to  the  Interest  Accrued  or  Prepaid  ac- 
count, as  the  case  may  be. 

DISCOUNT :  All  cash  discounts  given  or  taken 
are  to  be  entered  in  this  account  in  monthly  totals 
from  the  Cash  Paid  and  Cash  Received  Journals. 
Trade  discounts,  in  which  category  are  included 
all  discounts  in  excess  of  two  or  three  percent, 
should  be  credited  to  the  proper  Stock  account, 
or  better  still,  deducted  when  entering  the  in- 
voice in  the  Purchase  Journal. 

STATISTICAL  ACCOUNTS:  These  accounts  are 
so-called  because  they  are  opened  only  at  the  end 
of  a  fiscal  period  for  the  purpose  of  collecting  and 
segregating  certain  statistics  of  the  operations  of 
the  business  for  the  period,  the  net  result  of  which 
when  ascertained  is  transferred  immediately  to 
some  other  account  for  final  recording.  These 
accounts  are  also  called  closing  accounts,  because 
used  to  close  the  operating  accounts  for  the 


STATISTICAL  ACCOUNTS  111 

period.  The  two  accounts  commonly  falling 
within  this  category  are  the  Trading  Account  and 
the  Profit  and  Loss  Account. 

The  Trading  account  is  in  reality  a  sub-divis- 
ion of  the  Profit  and  Loss  account,  used  for  deter- 
mining the  Net  Profit  on  Operations  for  the  per- 
iod, separate  from  the  other  factors  of  gain  or 
loss,  such  as  purely  profit  and  loss  items  outside 
of  the  current  operations  of  the  business,  and  the 
Capital  Income  and  Expense  accounts. 

For  detailed  procedure  for  closing  the  operat- 
ing accounts  through  the  statistical  accounts  at 
the  end  of  the  year  or  other  fiscal  period,  see 
Chapter  XVII. 


CHAPTER  XI 
SUBSIDIARY  RECORDS 

SUBSIDIARY  records  or  accounts  are  those 
which  are  supplementary  to  General  Led- 
ger  accounts,  showing  in  greater  detail  the 
same  transactions  that  are  recorded  in  the  Ledger 
in  more  condensed  form.  The  corresponding  ac- 
counts in  the  General  Ledger  are  called  "Control- 
ling" accounts,  from  the  fact  that  they  control  or 
prove  the  accuracy  of  the  subsidiary  record;  and 
the  subsidiary  records  are  called  "Detail"  ac- 
counts, records,  or  ledgers.  The  subsidiary  re- 
cords are  posted  from  the  books  of  original  entry 
just  as  is  the  General  Ledger.  The  principal 
records  of  this  kind  found  usual  or  necessary  in 
the  garage  are  as  follows : 

ACCOUNTS  RECEIVABLE  LEDGER:  This  is  the 
detail  account  with  customers;  and  the  widest 
variety  of  methods  of  handling  these  accounts  are 
in  use.  Sometimes  the  ledger  is  a  bound  book, 
sometimes  loose-leaf,  sometimes  a  cabinet  drawer 
of  cards,  sometimes  merely  a  collection  of  charge 
tickets. 

112 


SUBSIDIARY  RECORDS  113 

The  bound  book  we  discard  because  of  incon- 
venience. The  mere  preservation  of  duplicates  of 
charge  tickets  is  awkward  and  insufficient,  be- 
cause of  the  accumulation  of  large  quantities  of 
the  slips,  and  the  difficulty  of  locating  all  the 
charges  to  a  customer's  account  when  it  is  desired 
to  do  so.  Accounts  with  customers  should  be 
kept  in  some  way  that  makes  possible  ready  refer- 
ence, for  at  least  six  months  or  a  year.  Neglect  to 
do  so  invites  loss  through  unsettled  disputes  and 
dissatisfied  customers.  To  copy  all  the  details  of 
transactions  in  a  loose-leaf  ledger,  even  when  the 
statement  for  the  customer  is  made  out  at  the  same 
time  by  use  of  carbon  paper,  except  in  the  smaller 
garages,  is  a  needless  duplication  of  work  besides 
being  slow  and  awkward. 

The  duplicate  billing  system  hereinbefore  de- 
scribed (Chapter  IV)  obviates  the  necessity  of 
recording  in  the  customers'  ledger  anything  but 
the  date,  invoice  number,  and  amount  of  each  in- 
voice. The  duplicate  invoice  supplies  the  only 
detailed  record  of  each  transaction  necessary  to 
retain.  These  duplicates  are  kept  in  a  cheap  post 
binder  in  numerical  order,  and  can  be  quickly 
referred  to  in  case  of  need.  It  is  the  logical  and 
modern  method  of  handling  customers'  charges, 
where  a  typewriter  is  available.  When  it  is  not, 
we  recommend  the  use  of  the  duplicate  ledger 


114 


PRACTICAL    GARAGE    ACCOUNTING 


leaf  and  statement  system,  combined  with  a  per- 
manent ledger  sheet  for  each  customer  for  record- 
ing monthly  totals  and  cash  payments.  These 
permanent  sheets  should  preferably  be  kept  in  the 
same  binder  as  the  monthly  statement  sheet  and 
carbon  duplicate,  and  by  use  of  a  tumble-form 
ledger  sheet  the  customer's  permanent  account 
may  always  be  opposite  his  accumulating  current 
month's  itemized  account. 

ACCOUNTS  PAYABLE  LEDGER  :  By  all  means  a 
detailed  account  should  be  kept  with  each  credi- 
tor, either  in  a  separate  loose-leaf  book  or  in  a 
section  of  the  General  Ledger,  represented  by  a 
controlling  account  in  the  liability  section.  If  but 
few  purchases  are  made  on  credit  but  little  time 
and  effort  will  be  necessary  to  keep  this  record; 
while  if  the  credit  purchases  are  numerous,  the 
necessity  for  the  record  increases  proportionately. 
If  a  perpetual  inventory  is  maintained  the  gener- 
al ledger  Accounts  Payable  account  is  indispens- 
able, and  the  work  of  keeping  the  latter  account 
in  balance  with  the  total  of  unpaid  invoices  will 
be  found  greater  where  detailed  accounts  payable 
are  not  kept  than  when  they  are. 

PERPETUAL  INVENTORY:  The  work  of  keep- 
ing a  continuous  record  of  all  stock  on  hand  in  the 
garage  may  appear  to  be  excessive,  but  after  the 
record  is  started  it  will  be  found  in  practice  to 


SUBSIDIARY  RECORDS 


115 


ARTICLE 

Vertflcailoa 
Ofttei 

Minimum 

LOCATION 

UNIT 

Maximum 

PaUs 

Kauj 

BOUGHT  FROM  OR 

UNIT  PRICES 
Cost         List 

STOCK,  KECO 
In       1      Out 

RD 

Biln 

Avx-  Unit 
Cost  of 
BiUncc 

Total  cos:  of 
Ba-Uaco 

Form  2.    HollUttr'a  Caraie  Cost  Srntm. 

Form  19— STOCK  RECORD  CARD 
Size  3x5  inches. 


LOCATION  OF  STOCK 


•JS2 


nrfii"-"'"-T  •-• IT 


Form  20— STOCK  RECORD  CARD 
Size  5x8  inches. 


116  PRACTICAL    GARAGE    ACCOUNTING 

save  more  time  than  is  required  to  keep  it  up.  For 
this  record  we  strongly  prefer  a  specially  de- 
signed stock  card,  such  as  we  illustrate  ( Form  1 9 ) , 
having  a  space  for  recording  of  orders ;  articles 
received;  sales;  cost  and  list  price;  location  of 
stock ;  maximum  and  minimum  quantities  desired 
to  be  kept  on  hand ;  dates  of  verification  by  physi- 
cal inventory;  and  value  of  stock,  to  be  entered 
whenever  it  is  desired  to  check  the  total  of  the 
card  record  with  the  controlling  stock  record  in 
the  General  Ledger.  Among  the  advantages  to 
be  derived  from  maintaining  this  record  we 
would  mention : 

( 1 )  It  makes  possible  a  smaller  investment  in  stock 
than  would  otherwise  be  necessary,  the  saving 
amounting  to  15  to  25  per  cent,  with  a  con- 
sequent economy  of  interest  on  money  invested, 
space  occupied  by  stock,  etc. 

(2)  It  facilitates  the  estimation  of  cost  of  work  to 
be  done,  thus  securing  contracts  that  might 
otherwise  be  lost  or  insuring  a  profit  on  jobs 
that  might  be  taken  at  an  unprofitable  figure. 

(3)  It  promotes  convenience  and  economy  in  buy- 
ing. 

(4)  It  saves  time  and  consequently  money  often 
lost  by  having  to  wait  for  needed  materials,  by 
automatically  calling  attention  to  low  stock. 

(5)  It  forms  a  basis  for  figuring  costs,  so  that  it 
is  not  necessary  to  depend  on  price  lists  or  in- 
voices. 

(6)  It  saves  the  time  of  employees  in  locating  parts 
or  materials  in  stock. 


SUBSIDIARY  RECORDS  117 

(7)  It  furnishes  a  basis  for  settlement  of  insur- 
ance in  case  of  fire  loss.  Hundreds  of  times 
the  cost  of  the  record  may  be  saved  in  such  a 
case. 

NOTES  PAYABLE  AND  RECEIVABLE  :  An  excel- 
lent specially  designed  book  for  the  purpose  of 
recording  the  details  of  notes  receivable  and  pay- 
able can  be  purchased  in  nearly  every  stationery 
supply  house.  This  record  shows  at  a  glance  just 
what  obligations  fall  due  in  each  month,  and  the 
due  date. 

USED  CAR  STOCK  AND  LIVERY  EQUIPMENT: 
A  detailed  record  should  be  kept  with  each  Used 
Car  owned  by  the  garage  either  for  sale  or  as  a 
part  of  the  livery  department  equipment,  which 
detailed  record  should  be  controlled  by  Used  Car 
Stock  Account  and  Livery  Car  Equipment  ac- 
count in  the  general  Ledger.  Expense  of  main- 
taining or  operating  these  cars  should  not  be 
charged  to  these  accounts,  but  only  such  charges 
as  are  capitalized ;  that  is,  original  cost,  and  cost  of 
rebuilding  or  other  permanent  additions  to  value. 
These  records  may  be  kept  in  a  separate  card  or 
loose-leaf  record.  In  addition  to  the  above  an 
expense  account  with  each  livery  car  in  service 
should  be  kept  from  which  a  statement  may  be 
drawn  off  monthly  for  the  information  of  the 
management;  which  accounts  will  be  controlled 
by  the  Livery  department  expense  accounts.  To 


118  PRACTICAL    GARAGE    ACCOUNTING 

these  detailed  accounts  should  properly  be  dis- 
tributed each  item  of  expense  appearing  in  the 
Livery  column  of  the  monthly  Departmental 
Cost  Sheet 

Other  special  subsidiary  records  are  frequently 
found  desirable  in  particular  cases;  and  in  open- 
ing them  their  relation  to  the  General  Ledger 
should  invariably  be  borne  in  mind  and  their 
agreement  with  General  Ledger  controlling 
accounts  be  maintained. 


CHAPTER  XI I 
THE  MONTHLY  STATISTICS 

THERE  is  a  large  amount  of  wasted  effort 
in  the  accounting  department  of  many  gar- 
ages, as  well  as  in  other  lines  of  business, 
through  maintaining  records  of  which  no  profit- 
able use  is  made.  These  records  sometimes  might 
be  made  valuable  by  being  carried  a  little  further 
and  by  having  the  information  obtained  pre- 
sented periodically  in  the  right  form  to  the  man- 
agement.    In  other  cases  the  record  is  in  itself 
useless  and  had  better  be  discontinued. 

No  record  should  be  kept,  no  account  opened  in 
the  ledger,  without  a  definite  object  in  view.  Fur- 
thermore this  object  should  not  be  merely  the  sat- 
isfaction of  the  bookkeeper's  ideas,  instincts,  or 
training,  but  rather  the  information  of  the  propri- 
etor or  director  of  the  business.  Therefore  the  ex- 
perienced accountant's  first  inquiry  in  reference 
to  any  system  of  accounts  that  he  is  called  upon  to 
design,  is;  What  particular  items  of  information 
are  necessary  or  desirable  for  the  manager  to 
know  and  to  be  guided  by  in  the  conduct  of  the 

119 


120  PRACTICAL    GARAGE    ACCOUNTING 

business,  in  order  to  better  attain  the  object  for 
which  it  is  intended,  namely,  the  increase  of  the 
proprietor's  income  or  wealth? 

The  ultimate  object  of  any  accounting  system, 
then,  by  which  it  is  to  be  judged  and  which 
should  be  kept  constantly  in  mind  and  worked  to- 
ward, is  the  information  supplied  periodically,  at 
least  monthly,  to  the  executive  management  of 
the  business;  the  statements,  showing  in  detail 
and  in  summary,  in  readily  understood  and  easily 
grasped  form  (for  most  business  managers  are 
not  accountants)  the  actual  accomplishment  in 
profit  and  loss  making,  and  the  actual  present  con- 
dition of  the  enterprise.  The  excellence  of  man- 
ner and  completeness  with  which  this  informa- 
tion is  secured  and  presented  to  the  management 
are  the  criterions  by  which  any  system  of  account- 
ing and  every  accountant  should  be  finally  judged. 

The  following  described  statements  should  be 
required  of  the  bookkeeper  by  the  garage  propri- 
etor or  manager;  and  he  should  not  be  satisfied 
unless  and  until  he  gets  them  in  good  shape  and  in 
a  reasonably  short  time  after  the  close  of  the 
month. 

Balance  Sheet 

This  is  a  statement  of  the  Assets,  Liabilities 
and  Net  Worth  of  the  business  at  a  particular 
date,  arranged  in  a  condensed  but  regular  and  log- 


THE  MONTHLY  STATISTICS  121 

ical  form.  It  therein  differs  from  the  Trial  Bal- 
ance, which  is  a  list  of  balances  of  all  open  ac- 
counts in  the  ledger,  separated  into  two  parts  or 
columns  of  debits  and  credits.  The  Trial  Bal- 
ance is  merely  for  the  purpose  of  informing  the 
bookkeeper  whether  the  ledger  is  in  balance  or 
not. 

A  model  garage  balance  sheet  is  presented  here- 
with (Form  21).  It  will  be  observed  that  the 
totals  of  the  different  classes  of  assets  and  liabil- 
ities as  at  the  end  of  the  preceding  month  are 
shown  for  comparison,  so  that  the  increase  or 
decrease  of  every  item  is  apparent  at  a  glance. 

Comparative  Operating  Expense  Statement 

COMPARATIVE  OPERATING  EXPENSE  STATE- 
MENT: This  statement  supplements  the  Balance 
Sheet  by  giving  the  details  of  the  operating  ex- 
pense accounts,  which  are  grouped  in  totals  on 
the  Balance  Sheet.  It  should  include  the  figures 
of  the  corresponding  accounts  for  the  preceding 
month  and  for  the  corresponding  month  of  the 
preceding  year,  thus  supplying  a  valuable  index 
of  the  upward  or  downward  tendency  of  the  bus- 
iness. A  model  for  this  statement  is  also  pre- 
sented, (Form  22),  which  we  believe  will  be 
readily  understood. 


122 


PRACTICAL    GARAGE    ACCOUNTING 


CASK:  Bank 
Imprest  Fund 

ACCTS.  RECEIVABLE 
Good 
Doubtful 
Defer.  Chgs. 

April 

THE  MODEL 

—  —  COMPARATIVE 

March  -  April 

-  ASSETS  
30,  1915, 

Depreciation* 
Keservaa 

Grosa       Tit       Mar.  31,   Increase 
1915.     or  Deer.* 

1740.26* 

478.95 
35.00      513.95      342.64     171.31 

6279.12 
2121.20 
191.89 
8592.  21_    6851.95     6858.73     16.78* 

TIRE  60ARANTEE  ACCT. 
DEPOSIT  ACCT.  "ITH  MANUFACTURER 

KOTES  RECEIVABLE 
Acer.  Interest 

MERCHANDISE: 
New  Car 
Used  Cars           211.20* 
Oen'l.  Stock 
Tire  Stock 
Gaaoline  ft  Oil      ___»«. 
211.30* 

13.00                13.00 
1000.00     1000.00 

3623.73 
100.17     3723.90     3479.89     244.01 

6042.32 
3832.31 
1183.20 
3298.64 
64.96 
14421.43     14210.23     13572.62     637.61 

EQ0IPME3T: 
Office 
C-on'l.  Stk.  Fcon 
Gasoline  ft  Oil 
Live  Storage 
Car  Repair 
Tire  Repair 
Battery 

REAL  ESTATE: 
Garage  Prop. 
Less  Mortgage 
Interest 
Ret  R.  Eat.  Invest. 

62.63* 
15.40* 
23.90* 
25.25* 
187.12* 
156.38* 
44.26* 
534.94* 

636.01 
177.22 
181.24 
189.43 
1160.20 
1015.05 
273.66 
3632,81     3097.87     3052.48     45.39 

244.52* 
9500.00* 
295.57* 
10040.09*  , 

20334.32 
20334.32     10294.23     9778.92     515.31 

DEFERRED  CHARGES  TO  OPERATIONS: 
Prepaid  Int.  on  Notes  Pay. 
•    Insurance 
Fuel  on  Hand 

126..  84 
111.87 
89.80      328.51      446.34     117.83* 

A0033.64     38541.62    1492.03 

Form  21— COMPARATIVE 
The  original  form  from  which  the  above  was 


THE  MONTHLY  STATISTICS 


123 


iE  CO. 


ACCOUNTS  PAYABLE:  Mdae. 
Payroll 
Proprietor's  Personal  Acct 

SUB-AGEKTS'  DEPOSITS 
BOTES  PAYABLE 
RESERVE  FOR  TAXES 

TOTAL  LIABILITIES 


CAPITAL  STOCK 

SURPLUS  at  Dec.  31,  1915, 

PROFIT  AND  LOSS  ACCT. 


SALES:  Sal ea  acct. 

Inter-dept.  Sales 
Vi»c.  Income 


LIABILITIES  

Mar.  31, 
1915. 

Increase 
or  Deer.* 

April  30,  1915 

5701.19 
315.78 
Acct..           357,64  6374.61 

8675.57 

2300.96* 

1200.00 

1200.00 

16982.46 

15692.37 

1290.09 

174.04 

225.00 

50.96* 

24731.11 

25792.94 

10  61.  63  • 

NET  WORTH 


Cost  of  Sales 
Pro.  Labor 
Allowances 


38518.67 

1507.57 

199.41 


49738.64 

1293.27 

?3.14 

51105.05 


40225.65 


GROSS  GARAGE  PROFIT         10879.40 

Expanses  „  8904. 17 

NET  GARAGE  PROFIT  1975.23 

INTEREST  391.52* 

DISCOUNT  49.64 

REAL  ESTATE  INCOME     716.00 
Uaint(n'ce    85.82 
Taxes        72.00 
Depre't'n    244.52 
Insurance    35.68  438.02    277.98 

TOTAL  RET  PROFIT 
HET  PRESENT  *ORTH 


13391.20 


1911.33 


i3391. 2t 


615.84' 
282.33' 

45.56 


210.09 


2591.0* 
109.19* 
4.0,8 


67.89 


15302.53 


40033.64    38541.62 


BALANCE  SHEET 

reproduced,  was  typewritten  on  two  8^x11  in.  sheets. 


1492.02 


124 


PRACTICAL    GARAGE    ACCOUNTING 

'THE     MODEL    GARAGE     CO. 


COMPARATIVE  OPERATING  EXPENSE 

STATEMENT 

1915 
To  Date 

April  30,  1915 

March 
1915 

April 
1915 

Rent 

163.00 

163.00 

652.00 

Light  ft  Power 

45.54 

43.13 

163.60 

Heating 

38.06 

69.55 

249.63 

Taxes 

7.00 

7.00 

28.00 

Depreciation 

115.73 

164.67 

347.35 

Fire  Insurance 

7.24 

4.44 

26.16 

Non-Productive  Labor 

348.87 

332.62 

1390.37 

Liability  Insurance 

40.96 

40.42 

149.00 

General  Stock  •»  Inbound  Freight 

11.90 

8.38 

12.60 

Tire  Stock       "      " 

9.05 

3.20 

16.44 

General  Stock  Room  Expense 

30.  65' 

52.19 

New  Car  Dept. 

125.53 

181.04 

435.33 

Used  Car  Dept. 

.25 

65.70 

133.64 

Tire     " 

1.91 

4.00 

11.46 

Live  Storage  Dept.  -^ 

*  .03 

4.82 

Livery  Dept. 

29.84 

Wash  Rack 

2.29 

7.29 

Repair  Dept. 

15.00 

31.64 

95.83 

Tire  Repair  Dept. 

6.52 

16.46 

Battery     " 

.58 

3.03 

New  Car  Inside  Expens 

77.54 

39.35 

116.89 

Uaed  Car  inside  Expen  e 

260.47 

41.90 

302.37 

Wash  Rack   " 

1.14 

1.14 

Car  Repair  " 

8.59 

.01 

8.60 

Battery     " 

.   1.85 

.02 

1.87 

General  Expense 

76.73 

35.94 

270.71 

Administrative  Salaries 

441.67 

445.83 

1756.03 

Office  Salaries 

161.70 

167.90 

648.01 

Office  Expense 

55.05 

75.12 

178.82 

General  Advertising 

22.84 

4.50 

253.47 

New  Car 

13.45 

7.85 

84.76 

Tire  Dept:  n 

22.25 

7.00 

29.25 

Car  Repair  Dept.  Advertising, 

3.75 

Salesmens  Salaries  ft  Com. 

356.95 

202.62 

879.57 

Collection  Expense 

5.30 

2.52 

17.44 

Estimated  Bad  Debt  Loos 

295.07 

141.69 

493.69 

New  Car  -  Free  Service 

10.64 

13.70 

32.76 

2741.28      2344.81 

8904.17 

Form  22— MONTHLY   COMPARATIVE  OPERATING 
EXPENSE  STATEMENT 

Typewritten  on  8^x11  inch  sheet. 


THE  MONTHLY  STATISTICS  125 

THE     MODEL     GARAGE     CO. 
PROFIT  AND  LOSS  STATEMENT 
April,   1915 

Gain  Loss  flet 

New  Car  Department  2386,79 

Ussd  Car         H  411.35 

General  Stock  Sales  Dept.  69.27 

Tires  &  Tubes  Department  244.26 

Gasoline  and  Oil       n  1.15 

Live  'Storage  Department  23.82 


Dead      -", 
'Wash  Rack 
Car  Repairs 
Tire       " 
Battery 


2.56 

15.65 
333.13 

112.72 


13.59 


Miscellaneous  Garage  Income      15.15 


3110.25     519.18 


Garage  Operating  Profit  for  Month  2591.07 

Discount  Gained  4.08 

Real  Estate  Income  -  Net  67.89 


TOTAL  2663.04 

LESS:  Interest  Accrued  109.19 


INCREASE  OF  NET  WORTH  FOR  MONTH  2553.85 


Form  23— MONTHLY  PROFIT  AND  LOSS  STATEMENT 

Typewritten   on   8*^x11   inch  sheet 


126 


PRACTICAL    GARAGE    ACCOUNTING 


THE 


April 

General  Expense  Distribution         r^* 

Used 
Car 

Gen. 
Stk. 

House  Aim'tive 

3en.Stk.Rm, 

,  Selling    Car 

Net  Dept.  Investment 

553.28 

1345.02 

6042.32 

3621.11 

Rent                      163.00 

Heat                        38.06 

Light                      11.76 

Taxes 

.23 

.54 

2.44 

1.47 

Depreciation  '  . 

5.30 

1.56 

60.82 

Insurance 

.23 

.56 

2.53 

1.51 

Dept.  Diract  Expanse 

125.53 

.25 

Inbound  Freight 

11.90 

Power 

Mon-Pro.  Labor  -  1947  Hrs.     11.90 

30.42 

40.55 

42.20 

29.07 

Liability  Insurance             .43 

'  3.10 

2.26 

9.73 

1.05 

Inside  Expense 

77.54 

260.47 

Aim'tivs.  Salaries 

333.33 

21.66 

43.34 

Office  Salaries 

161.70 

"   Expense 

55.05 

General  Expense             ____ 

76.73 

Distribution  -  House  Gen'l.   225.15 

17.51 

14.03- 

«       Adm'tive.  Gen'l. 

683.60 

16.78 

364.91    129.04 

25.44 

TOTAL,  LABOR  OVERHEAD 
Distribution,  General  Stock  Room  Gsn 
TOTAL  GARAGE  OPERATING  EXPENSE 

«l 

109.89 

53.69 

432.40 

400.C8 

53.69 

Advertising 

22.84     13.45 

Salesmen's  Salaries  ft  COM. 

356.95 

Credit  and  Collection 
Bad  Debt  Reserve 

$.30 
250.07 

11.52 

2.72 

Free  Service 
Distribution,  Selling  Ganaral 

10164 
393.05    327.65 

16.41 

3.  65 

TOTAL  EXPENSES 
COST  OF  «DSE.  SOLD 

1391.16 
20583.73 

428.01 
1190.00 

60.07 
377.17 

•COST  OF  LABOR  SOLD  -  1622  Hr». 

11.99 

GP./.ND  TOTAL  COSTS 
TOTAL  SALES 


OAIH  OR  LOSS 


•21974.89  1630.00   437.24 
(Misc.  Incoma  15.15)  24361.68  1218.55   367.97 

15.15   2386.79   411. 35*   69.27' 


Interest,  1  Mo.  5  6%  on.  Departmental  Investment 
Percent  of  Gain  or  Loss  to  Total  Costa 
Average  Prime  Coat  of  Pro.  Labor  per  Hour 

"   Labor  Overhead  per  Pro.  Labor  Hour 
Percent  Operating  Expanae  to  Mdaa.  A  Pro.  Labor  Ceat* 

"  Total  Expense  to  Mdse.  A  Pro.  Labor  Costs 


30.21 
10.86 


18.11 

25.24^*     15.85/H 


2.10*      33.28JS       14.20? 
6.76*       35.60*       15.93;-: 


Form  24— MONTHLY  DEPART- 

Typewritten  on  two  8^x11  inch 

actual  month's  business  in  a 

be  considered 


THE  MONTHLY  STATISTICS 


127 


1915. 

Tire 

Gaa.  * 

Liva 

Da*d         Wash 

Car 

lira 

Eattary 

Total* 

Stock 

Oil 

Stga. 

St»s.        Rack 

Baoair 

Repair 

3298.64 

222.30 

164.18 

973.08 

858-.  67 

229.40 

17309.10 

163.00 

33.06 

11.76 

1.33 

.09 

.07 

.39 

.35 

.09 

7.GG 

1.63 

1.58 

11.71 

10.38 

2.76 

115.73 

1.38 

.09 

.07 

.41 

.36 

.10 

7.24 

1.91 

15.00 

142.69 

9.05 

20.95 

4.00 

2.00 

27.78 

33.78 

56.39 

5.38 

56.18 

2.59            .93 

35.13 

25.23 

12.35 

343.87 

2.05 

,     .20 

2.05 

\    .10           .64 

15.30 

2.30 

1.70 

4G.96 

1.14 

8.59 

1.35 

349.59 

.43.34 

441.67 

161.  *0 

53.03 

76.73 

9.93 

2.79; 

80.65 

9.15         6.57 

51.23 

26.63 

6.57 

22.64 

2.10 

14.90 

.74         4.64 

78.30 

14.21 

9.90 

13.92 

263.45 

81.51 

63.60 

,  47.09 

2.63 

6.43 

104.67 

12.27 

155.50 

12.53       13.92 

310.54 

84.19 

70.03 

22.25 

58.54 

356.95 

5.30 

16.00 

.64 

.25 

.16            .39 

10.32 

1.13 

1.18 

295.07 

10.64 

24.52 

.87 

.67 

.20            .63 

13.90 

1.67 

2.87 

167.44 

13.78 

156.42 

12.94       14.94 

334.76 

37.04 

74.72 

2741.28 

1575.  CO 

166.61 

330.82 

13.35 

45.13 

24287.31 

16.61 

327.33 

38.05 

33.09 

427.5o 

1742.44 

180.39 

156.42 

12.94       31.55 

993.40 

143.94 

152.94 

27456.15 

1986.70 

179.24 

132.60 

15.50       47.20 

1326.52 

130.35 

265.66 

30047.22 

244.26 

1.15* 

23.82* 

2.56       15.65 

333.12 

13.59* 

112,72 

2591.07 

16,49 

1.11 

.82 

4.87 

4.29 

1,15 

°6.34 

14.02* 

.64$* 

15.27$* 

19.70$     49.60$ 

33.  $1$ 

9.43$* 

73.67$ 

*.44$ 

.218 

.266 

.253 

.264 

6.65? 

7.37$ 

.155 
83.85* 

.214 
47.15$ 

.541 
147.96 

.527 
89.56$ 

.259 
6.27$ 

10.53$ 

8.25$ 

87.8$ 

50.78$ 

155.36 

95.80$ 

11.09$ 

MENTAL  COST  SHEET 

sheets.     These  figures  show  an 
successful  garage,  and  may 
fairly  typical 


128  PRACTICAL    GARAGE    ACCOUNTING 

Profit  and  Loss  Statement 

PROFIT  AND  Loss  STATEMENT  :  A  condensed 
Profit  and  Loss  Statement  showing  net  operating 
gain  or  loss  of  each  department,  the  capital  in- 
come and  expense  items,  and  the  purely  Profit 
and  Loss  account  items  is  the  third  monthly  state- 
ment to  be  compiled.  (Form  23). 

Departmental  Cost  Sheet  or 
Profit  and  Loss  Statement 

This,  the  fourth  of  the  monthly  set  of  business 
statements,  presents  the  summing  up  of  the  re- 
sults and  findings  of  the  whole  accounting  sys- 
tem. Although  necessarily  somewhat  complex 
the  complications  we  believe  have  been  reduced 
to  a  minimum  by  the  special  form  presented  as 
an  essential  part  of  the  system  of  accounts  out- 
lined herein.  (Form  24).  It  will  be  described 
in  detail  in  a  subsequent  chapter. 


CHAPTER  XIII 
THE  MONTHLY  COST  SHEET 

TWO  objects  have  been  kept  in  view  in 
working  out  the  details  of  this  form :  First, 
to  tell  the  exact  facts  concerning  the  results 
of  the  operations  of  the  business  in  the  most  easily 
understood  terms;  Second,  to  arrive  at  this  in- 
formation in  the  simplest  and  quickest  manner. 
The  Monthly  Cost  Sheet  is  in  fact  an  analysis  and 
redistribution  of  the  figures  of  the  Profit  and  Loss 
statement.  The  grand  total  of  Net  Garage  Profit 
or  Loss  shown  by  each  of  the  statements  should 
agree  in  amount.  The  grouping  and  arrange- 
ment of  the  items  that  are  used  in  reaching  this 
figure,  however,  differ  radically  on  the  two  state- 
ments, and  present  the  results  attained  by  the  bus- 
iness from  two  different  standpoints  or  angles,  as 
has  been  before  suggested. 

The  analysis  of  sales  into  departments  is  merely 
a  matter  of  deciding  what  departments  the  busi- 
ness is  to  be  divided  into,  and  keeping  a  careful 
record  of  the  sales  made,  under  the  department 
headings.  A  considerable  part  of  the  expenses  of 
the  garage  are  also  easily  divided  among  these  de- 

129 


130  PRACTICAL    GARAGE    ACCOUNTING 

partments,  as  direct  charges.  The  larger  part  of 
the  expense,  however,  is  general.  It  is  not  directly 
applicable  to  the  different  departments,  and 
no  single  method  of  distributing  this  indirect  ex- 
pense or  "over-head"  is  at  all  accurate  or  satis- 
factory, owing  to  the  differences  in  nature  of  the 
various  expense  items.  For  instance,  it  would  be 
manifestly  unfair  to  distribute  the  charge  for 
Rent  to  the  different  departments  on  the  basis  of 
proportion  of  total  sales.  The  New  Car  Sales, 
or  the  Car  Repair  sales  may  constitute  a  consider- 
able proportion  of  the  total,  while  the  actual 
space  occupied  by  these  departments  as  a  matter 
of  fact  is  usually  but  a  small  portion  of  the  whole. 
Neither  would  it  be  fair  to  all  departments  to 
charge  expenses  such  as  office  salaries,  advertis- 
ing or  collection  expenses,  on  a  basis  of  space  oc- 
cupied by  the  various  departments ;  as  the  Storage 
department,  using  the  largest  space,  would  then 
usually  bear  a  disproportionate  burden  that 
would  make  impossible  the  showing  of  a  profit  in 
that  department.  Literally  scores  of  questions 
of  detail  have  entered  into  consideration  in  fixing 
the  exact  arrangement  of  this  form,  which  in 
reality  condenses  into  a  single  sheet  the  large  vol- 
ume of  entries  usually  made  through  a  cost  jour- 
nal and  ledger. 


THE  MONTHLY  COST  SHEET  131 

Preliminary  Schedules 

The  following  schedules  should  be  compiled 
before  commencing  the  preparation  of  the  Cost 
Sheet: 

(1)  Department  area  or  space  percentage 
sheet,  showing    percentage    of    floor-space    oc- 
cupied by  each  general  and  sales  department.  To 
obtain  these  percentages  measure  the  dimensions 
of  the  space  set  aside  for  each  department,  and 
figure  the  percentage  that  this  space  bears  to  the 
total  of  the  garage  floor-space  actually  used.    The 
space  occupied  by  the  office  and  that  in  the  gener- 
al stock  room  should  be  considered  as  separate 
departments.     The  entrances  and  passageways 
space  should  be  disregarded  in  the  calculation,  as 
this  "overhead"  space  is  distributable  to  each  de- 
partment in  the  same  proportion  as  the  space  used 
by  that  department  bears  to  the  whole  area  of 
"productive"  or  actually  used  space,  hence  would 
have  no  effect  on  the  percentage  of  space  in  each 
department  if  it  were  included. 

(2)  A  schedule  of  Departmental  Investment 
at  the  end  of  the  month.    This  is  the  sum  of  each 
department's    stock   on    hand,    machinery    and 
equipment  and  small  tools  accounts,  less  depreci- 
ation reserve  accounts  set  up  against  these  assets. 
This  schedule  should  include  the  Office  and  Gen- 


132  PRACTICAL    GARAGE    ACCOUNTING 

eral  Stock  Room  Equipment  Accounts,  as  sepa- 
rate items. 

(3)  Summary  of  Payrolls  for  the  month  by 
departments,  showing  hours  and  cost  of  produc- 
tive and  non-productive  labor. 

(4)  A  memorandum  of  rate  of  Liability  In- 
surance premium  per  hundred  dollars  of  payroll, 
and  of  departments  and  employees  covered. 

(5)  Net  Sales  by  Departments  (analysis  of 
Sales,    Inter-department    Sales,    Miscellaneous 
Sales,  and  Sales  Allowance  accounts,  showing 
merchandise,  labor  and  miscellaneous  sales  sepa- 
rately.) 

(6)  A  similar  departmental  analysis  of  Cost 
of  Sales  account. 

The  above  described  schedules  are  referred  to 
by  number  in  the  course  of  the  following  instruc- 
tions. The  other  items  of  the  monthly  Cost  Sheet 
are  either  obtainable  direct  from  the  general  led- 
ger, or  must  necessarily  be  figured  during  the 
preparation  of  the  Cost  Sheet  itself. 

Take  a  sheet  of  columnar  paper,  or  a  special 
form  such  as  is  illustrated  in  Form  24,  head  the 
first  four  columns  with  the  designations  of  the 
four  subdivisions  of  general  or  overhead  expense, 
viz.,  House  (or  Space),  Administrative,  General 
Stock  Room  and  Selling,  followed  by  a  column 
headed  for  each  department  operated,  and  a 
Total  column.  In  listing  the  expense  and  other 


THE  MONTHLY  COST  SHEET  133 

items  on  the  sheet,  enter  the  general  ledger  totals 
in  the  Total  column  first,  then  after  making  the 
proper  distribution  in  the  general  and  depart- 
ment columns,  see  that  the  distribution  of  items 
on  each  line  cross-foots  to  the  total  shown  in  the 
Total  column. 

In  a  preceding  chapter  the  expense  accounts 
have  been  divided  into  five  classifications, 
namely:  House,  Investment,  Operating,  Admin- 
istrative, and  Selling.  This  classification  had 
reference  to  their  distribution  on  the  Depart- 
mental Cost  Sheet. 

House  or  Space  General 

The  House  expense  items,  consisting  of  Rent, 
Heat,  and  Light,  Fireman's  labor  etc.,  are  dis- 
tributed over  the  garage  in  proportion  to  the 
space  occupied  by  each  department.  These  items 
are  to  be  entered  in  the  first  column  of  the  Cost 
Sheet,  and  the  total  distributed  on  the  percentage 
basis  ascertained  as  above  (Schedule  1),  the 
charge  to  the  office  being  entered  in  the  Admin- 
istrative Expense  column,  and  that  proportion 
charged  to  General  Stock  Room  entered  in  Gen- 
eral Stock  Room  Expense  column. 

Investment  Expenses 

The  Investment  Expense  classification  is  dis- 
tributed in  proportion  to  the  investment  in  equip- 
ment and  stock  in  each  department  ( Schedule  2) . 


134  PRACTICAL    GARAGE    ACCOUNTING 

Each  item  should  be  figured  separately,  how- 
ever; it  being  desirable  to  show  the  items  of 
Taxes  and  Insurance  separately  under  each  de- 
partment, and  the  Depreciation  being  a  direct 
charge,  set  up  separately  on  each  department's 
equipment  in  the  General  Ledger.  For  the  in- 
formation of  those  to  whom  this  statement  is  sub- 
mitted as  well  as  for  convenience  in  calculating 
the  distribution,  the  net  departmental  investment 
should  be  entered  at  the  top  of  statement  under 
each  department  heading.  The  amount  of  Taxes 
and  Fire  Insurance  are  distributed  on  a  percent- 
age basis  arrived  at  by  dividing  the  departmental 
investment  by  the  total  investment  in  all  depart- 
ments. After  figuring  this  distribution  on  a  work- 
ing sheet  the  items  should  be  added  to  see  that 
they  agree  with  the  total  as  entered  in  the  Total 
column,  the  probable  difference  of  a  few  cents 
adjusted  by  changing  the  unit  figures  in  some  of 
the  department  items;  and  the  amounts  charge- 
able to  each  department  are  then  to  be  entered  in 
the  proper  columns,  the  charge  based  on  Office 
Furniture  and  Fixtures  in  the  Adminstrative 
General  column,  that  on  account  of  General 
Stock  Room  equipment  and  stock  in  the  General 
Stock  Room  Expense  column.  The  figures  for 
depreciation  under  each  department  may  be 
quickly  ascertained  by  referring  to  the  Reserve 
for  Depreciation  accounts  in  the  General  Ledger. 


THE  MONTHLY  COST  SHEET  135 

Direct  Operating  Expenses 

The  Operating  expense  classification  embraces 
expenses  directly  chargeable  to  the  different  op- 
erating departments,  which  are  already  distri- 
buted in  the  general  ledger  expense  accounts, 
with  the  exceptions  of  Non-Productive  Labor, 
Liability  Insurance  and  Power.  The  Non-Pro- 
ductive Labor  distribution  is  taken  from  the  Pay- 
roll (Schedule  3),  that  charged  to  General  Non- 
Productive  Labor  being  entered  in  the  Adminis- 
trative General  expense  column,  that  to  General 
Stock  Room  Non-Productive  to  the  General 
Stock  Expense  column,  and  the  departmental 
Non-Productive  charged  in  the  proper  depart- 
ment columns.  Liability  Insurance  cost  is  dis- 
ributed  on  the  basis  of  the  rate  of  premium  per 
hundred  dollars  of  the  total  payroll  ( Schedule  4) . 
Power  should  be  distributed  between  the  Car  Re- 
pair and  any  other  departments  using  it,  on  the 
basis  of  such  information  as  is  obtainable.  Fre- 
quently the  current  for  power  purposes  is  taken 
through  the  same  electric  meter  as  the  current 
for  lighting,  in  which  case  an  estimated  division 
must  be  made  in  making  the  charge  to  these  Gen- 
eral Ledger  expense  accounts.  In  larger  estab- 
lishments where  separate  meters  are  in  use  the 
distribution  will  be  more  exact. 


136  PRACTICAL    GARAGE    ACCOUNTING 

Administrative  General 

The  fourth  division  of  expense  accounts  is  the 
Administrative,  and  this  presents  the  greatest  dif- 
ficulties in  distribution.  If  it  were  possible  to 
arrive  at  even  a  reasonably  close  approximation 
of  the  time  devoted  by  the  administrative  officers 
and  the  office  and  other  general  employees  to  the 
work  of  each  department,  that  would  perhaps  be 
best  basis  for  this  distribution ;  but  as  this  is  mani- 
festly impossible  some  other  method  of  general 
applicability  must  be  arrived  at. 

It  is  arbitrary  and  illogical  to  distribute  office 
overhead  in  the  same  ratio  as  the  direct  depart- 
ment expenses.  The  fact  that  a  large  amount  of 
direct  expenses  can  be  fastened  on  one  depart- 
ment, as  for  instance  the  Car  Repair  Shop,  is  no 
justification  for  still  further  penalizing  that  de- 
partment with  the  same  proportion  of  the  admin- 
istrative expenses ;  especially  in  view  of  the  fact 
that  car  and  accessory  sales  usually  occupy  the 
larger  part  of  the  proprietor's  time  and  attention. 
To  distribute  this  classification  of  expense  on  the 
basis  of  space  occupied  by  each  department 
would  also  be  manifestly  unfair,  especially  to  the 
Live-Storage  Department,  which  occupies  the 
largest  amount  of  space  but  by  no  means  creates 
the  most  work  for  the  officers  and  office  em- 
ployees. To  make  the  distribution  on  the  basis  of 
department  sales  would  be  unjust,  for  instance,  to 


THE  MONTHLY  COST  SHEET  137 

the  New  Car  Department,  as  new  cars  usually 
constitute  a  much  larger  proportion  of  the  vol- 
ume of  sales  than  the  proportion  of  time  devoted 
to  the  department  by  the  administrative  and  office 
force.  To  base  the  distribution  on  the  employees' 
time  or  labor  hours  in  each  department  would 
place  an  undue  burden  on  the  labor  sales  depart- 
ments, Car  Repair,  Tire  Repair,  etc.  But  since 
both  the  volume  of  business  and  the  operating 
employees'  time  required  by  each  department, 
have  a  bearing  on  the  proportion  of  the  officers' 
and  office  employees'  time  required  by  each  de- 
partment, it  would  appear  that  a  combination  of 
the  two  last  mentioned  methods  of  distribution 
would  be  the  fairest  basis  for  general  garage  use. 

Method  of  Distribution 

As  a  rule  the  method  of  distribution  described 
below  will  be  found  to  be  not  only  logical,  but  to 
work  out  well  in  practice,  giving  each  depart- 
ment a  fair  share  of  the  general  administrative 
expenses,  in  accordance  with  the  size  and  activ- 
ity of  the  department.  It  is  suggested,  however, 
that  the  percentage  of  administrative  expense 
chargeable  to  each  department  on  this  basis  be 
figured  by  the  bookkeeper,  and  a  schedule  of  the 
percentages  be  submitted  to  the  manager  for  con- 
sideration. If  he  decides  that  it  does  not  fairly 
represent  the  department  distribution  of  his  own 


138  PRACTICAL    GARAGE    ACCOUNTING 

and  the  office  force's  time  he  should  make  an  ar- 
bitrary adjustment  of  the  figures  and  so  establish 
a  standard  for  the  distribution  each  month. 

Selling  Expenses 

Before  making  this  distribution  on  the  Cost 
Sheet  the  expenses  under  the  fifth  classification 
must  be  entered,  viz.,  the  Selling  Expenses.  The 
amounts  of  such  of  the  selling  expense  accounts 
as  are  general,  applying  to  the  whole  garage,  are 
to  be  entered  in  the  General  Selling  Expense  col- 
umn ;  but  accounts  that  apply  to  a  particular  de- 
partment will  be  charged  direct  to  that  depart- 
ment, such  as  special  department  Salesmen's  Sal- 
aries and  Commission,  departmental  Free  Ser- 
vice, etc.  The  Estimated  Bad  Debt  Loss  should 
be  directly  distributed  on  the  basis  of  the  charge 
sales  of  each  department. 

After  entering  the  amounts  of  all  the  selling 
expense  accounts,  the  General  Administrative 
expense  must  next  be  distributed,  as  a  proportion 
of  it  is  chargeable  to  General  Selling  Expense. 
Take  a  sheet  of  columnar  paper,  head  the  col- 
umns "General  Selling", "General  Stock  Room", 
and  with  the  operating  department  names.  Enter 
in  the  respective  columns  the  amount  of  mer- 
chandise purchases  for  the  month,  the  total  of  the 
expense  items  so  far  entered  on  the  Cost  Sheet, 
and  finally  the  cost  of  Productive  Labor,  in  each 


THE  MONTHLY  COST  SHEET  139 

department.  Foot  the  columns  of  the  Distribu- 
tion SheeJ:  and  add  together  the  totals  so  ascer- 
tained, to  find  the  grand  total  of  Office  Volume 
for  the  month.  The  proportion  that  total  sales 
bears  to  this  grand  total  will  be  the  proportion  of 
Administrative  Expense  chargeable  to  General 
Selling  Expense,  and  this  amount  should  be  en- 
tered in  the  column  so  headed  on  the  Cost  Sheet. 
This  results  usually  in  charging  a  little  over  one- 
half  of  the  administrative  general  expenses  to 
general  selling  expense.  This  division  will  be  re- 
cognized as  fair  when  we  remember  that  the  of- 
ficers' or  proprietor's  time  is  or  should  be  largely 
given  to  the  problem  of  selling;  while  the  time  of 
the  office  force  is  to  a  great  extent  devoted  to  re- 
cording, billing,  and  collecting  the  charge  sales 
of  the  business. 

The  remainder  of  the  Administrative  Ex- 
pense is  considered  to  apply  to  the  superintend- 
ence, buying,  and  accounting  of  the  operating 
departments.  It  is  to  be  distributed  in  two  ways 
and  the  results  averaged  in  order  to  be  fair  to 
both  the  labor  and  the  merchandising  depart- 
ments. The  office  volume  summary  sheet  just 
referred  to  shows  the  total  purchases  and  ex- 
penses so  far,  under  each  department.  Find  the 
percentage  of  each  of  these  department  totals  to 
the  grand  total  of  these  amounts,  which  is  the  of- 
fice volume  for  the  month  excluding  sales.  Then 


140  PRACTICAL    GARAGE    ACCOUNTING 

calculate  the  percentage  of  total  productive  and 
non-productive  labor  hours  in  each  department 
(disregarding  labor  charged  in  any  general  ex- 
pense column  except  the  General  Stock  Room) 
to  the  grand  total  of  labor  hours  charged  to  the 
departments  direct  including  the  general  stock 
room.  These  department  percentages  must  then 
be  averaged  with  the  percentages  just  previously 
obtained  on  office  volume,  by  adding  together  the 
two  percentages  under  each  department  and  div- 
iding by  two.  See  that  the  averages  so  obtained 
total  100  percent;  then  calculate  the  distribution 
of  the  remainder  of  Administrative  General 
Expense  (left  after  deducting  the  amount  charged 
to  General  Selling  Expense)  and  enter  the 
amounts  so  ascertained  in  the  proper  department 
columns  of  the  Cost  Sheet. 

Labor  Overhead 

The  totals  of  departments  H,  I,  J,  K,  L  and  M 
columns  should  now  be  struck  and  entered  as  the 
Labor  Overhead  of  those  departments.  Distri- 
bution should  then  be  made  of  the  General  Stock 
Room  expense  column,  on  the  proportion  of  the 
cost  of  general  stock  sold  through  departments 
C,  J,  K,  L,  and  M ;  and  another  total  struck  across 
all  the  department  columns  (except  the  purely 
selling  departments  A,  B,  C,  D,  E)  which  will 
show  the  total  Garage  Operating  Expense  by  de- 


THE  MONTHLY  COST  SHEET  141 

partments.    The  expense  of  the  five  departments 
excepted  is  in  reality  all  Selling  expense. 

The  total  of  the  General  Selling  Expense  col- 
umn is  then  to  be  distributed  over  the  depart- 
ment columns  in  proportion  to  department  total 
Sales  to  customers,  and  totals  struck  showing  the 
Grand  Total  Expense  by  departments.  To  these 
figures  are  then  added  the  Cost  of  Merchandise 
sold  and  Cost  of  Labor  sold  (i.  e.  Pro- 
ductive Labor),  the  total  of  the  three  items  giv- 
ing the  Grand  Total  Costs  by  departments.  Next 
enter  total  sales  in  each  department  (Schedule  1) 
entering  the  amount  of  any  miscellaneous  sales, 
such  as  junk  or  waste  paper,  which  cannot  pro- 
perly be  credited  to  any  particular  department, 
in  one  of  the  General  Expense  columns.  The  dif- 
ference between  the  last  two  figures  under  each 
department  is  the  net  gain  or  loss  of  the  depart- 
ment for  the  month.  If  a  gain,  enter  in  black  ink ; 
if  a  loss,  in  red. 

Statistical  Information 

The  six  other  items  of  statistical  information 
provided  for  beneath  the  Gain  or  Loss  figure  for 
each  department,  are  the  items  most  often  re- 
quired by  the  management.  These  are : 

Interest  for  one  month  at  6%  on  Departmental  Investment. 
(This  is  shown  in  dollars  and  cents,  and  as  ft  appears 
directly  beneath  the  profit  or  loss  of  each  department 
those  desiring  to  include  interest  on  deparmental  in- 


142  PRACTICAL    GARAGE    ACCOUNTING 

vestment  in  figuring  their  costs  may  readily  subtract 
the  interest  item  from  department  gain  or  add  it  to 
department  loss.  The  highest  accounting  authorities 
differ  as  regards  the  propriety  of  considering  the  in- 
terest on  departmental  investment  as  an  item  of  cost ; 
the  majority  holding  that  interest  should  not  be  con- 
sidered as  an  item  of  cost,  but  as  a  Capital  Expense.) 

Percent  of  Gain  or  Loss  to  Total  Costs. 

Percent  of  Department  Operating  Expense  to  total  prime 
Costs. 

( In  this  calculation  the  operating  expense  totals,  not 
including  the  Selling  expense,  are  used.  By  total 
prime  cost  is  meant  the  Merchandise  and  Productive 
Labor  costs  added  together.) 

Percent  total  expenses  to  total  prime  costs. 

( In  this  calculation  the  selling  expense  is  included ; 
the  prime  cost  being  the  same  as  in  the  calculation 
just  preceding.  Hence,  the  percentage  of  Selling  Ex- 
pense to  Total  Prime  Costs  is  the  difference  between 
the  last  two  percentage  figures  under  each  depart- 
ment.) 

Average  prime  cost  of  Productive  Labor  per  hour. 

Average  Labor  overhead  per  Productive  Labor  hour. 

Other  statements  will  be  desired  in  special 
cases,  such  as  Livery  Department  Operating 
Statement  by  cars; (see  Model,  Form  25)  ;  Real 
Estate  Income  and  Expense  Statement;  Average 
Cost  per  unit  in  each  department,  i.  e.,  per  car 
stored  in  Storage  department,  per  car  washed  in 
Washing  department,  per  Battery  charged,  etc. 
All  these  reports  should  be  submitted  on  uniform 
sized  sheets  so  that  they  may  be  placed  together 
in  a  ring  binder  or  other  suitable  receptacle  and 
kept  on  the  executive's  desk  for  ready  reference 
and  study. 


MONTHLY  STATISTICS 


143 


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CHAPTER  XIV 
INSTALLING  THE  SYSTEM 

AN  argument  on  the  high  desirability,  from 
the  standpoint  of  efficiency,  of  planning 
all  work  in  advance  and  adhering  as  faith- 
fully as  possible  to  the  program  mapped  out, 
would  be  out  of  place  here;  but  the  principle  is 
well  established  and  in  recognition  thereof  this 
and  the  three  following  chapters  are  included  in 
this  volume.  Such  a  guide,  of  course,  is  especi- 
ally needed  in  installing  a  new  system  of  accounts 
by  the  bookkeeper  of  limited  experience.  Hence 
we  present  instructions  for  doing  so  which  to  the 
experienced  accountant  may  appear  unnecessar- 
ily elementary  and  minute. 

For  the  benefit  of  those  who  desire  to  spread 
the  work  of  inaugurating  and  learning  the  details 
of  the  system  over  some  time,  gradually  adding 
one  feature  after  another  until  the  whole  is  in 
operation,  we  have  divided  the  course  to  be  fol- 
lowed into  several  sections  which  may  be  taken 
up  one  at  a  time,  at  such  intervals  as  may  be 
thought  desirable. 

144 


INSTALLING    THE    SYSTEM  145 

We  would  state,  however,  that  we  cannot  re- 
commend this  course  as  the  best.  We  consider  it 
entirely  feasible  for  any  person  of  good  average 
intelligence  and  ability  and  a  fair  knowledge  of 
the  principles  of  double-entry  bookkeeping  to  in- 
stall a  complete  and  thoroughly  satisfactory  sys- 
tem of  general  and  cost  accounts  by  following  the 
program  outlined  in  this  chapter  and  explained 
in  detail  in  the  preceding  pages;  but  so  much 
time,  labor  and  annoyance  can  be  saved  by  the 
employment  of  a  competent  expert  to  oversee  and 
assist  in  the  installation  of  the  whole  system  at 
once,  that  the  latter  course  will  almost  invariably 
be  found  by  far  the  most  satisfactory  and  econom- 
ical in  the  end. 


( 1 )  Obtain  a  supply  of  Time  Cards,  Material  Re- 
quisitions,  Stock  Record  Cards,   and   Payroll 
Sheets. 

(2)  Take  a  complete  and  careful  physical  inven- 
tory of  General  Stock,  Tire  Stock  and  Gaso- 
line and  Oil  Stock  on  hand  the  last  day  of  the 
month. 

(3)  Open  General  Ledger  Accounts  by  first  care- 
fully listing  all  assets  and  liabilities  according 
to  the  classifications  outlined  in  Chapters  VIII, 
IX  and  X ;  then  enter  the  amounts  of  the 
schedules  of  assets  in  the  General  Journal,  in 
the  debit  column,  followed  by  the  liabilities  in 
the  credit  column;  the  difference  between  the 
total   assets   and   total   liabilities   is   the   Net 
Worth,  which  should  be  entered  last  as  a  bal- 
ancing figure.     If  the  concern  is  incorporated 


146 


PRACTICAL    GARAGE    ACCOUNTING 


the  par  value  of  Capital  Stock  must  be  entered 
as  a  credit,  and  the  difference  between  the  total 
assets  and  total  liabilities,  including  Capital 
be  then  entered  as  Surplus  (credit)  or  Deficit 
(debit).  These  items  are  then  to  be  posted  to 
the  General  Ledger  as  opening  entries  in  each 
account. 

(4)  Transfer  the  items  of  the  inventory  to  the 
Stock  Record  Cards. 

(5)  If  possible,  place  some  one  individual  in  charge 
of  General  and  Tire  Stocks,  and  if  practicable 
make  it  impossible  for  anyone  else  to  get  any- 
thing out  of  stock,  by  arranging  stock  room 
under  lock  and  key.    Thereafter  issue  articles 
or  merchandise  only  upon  properly  filled-out 
Material  Requisitions. 

(6)  Get  a  time-stamp  or  clock,  issue  Time  Cards 
to  workmen,  and  insist  on  their  use  as  ex- 
plained in  Chapter  III. 

(7)  Commence  analyzing  workmen's  time  on  Pay- 
roll  Sheets;   insisting  on  Time   Cards  being 
turned  in  for  shop-time  as  well  as  customers' 
with  full  report  of  how  time  was  spent. 


II 

(8)  Change  methods  of  handling  cash  to  conform 
to  those  outlined  in  Chapter  III,  installing  the 
Combination  Garage  Journal  and  Imprest 
Fund  as  there  described. 


Ill 

(9)  Select  the  billing  system  best  adapted  to 
your  needs  as  described  in  Chapter  IV,  and 
commence  the  distribution  of  Sales  and  Cost  of 
Sales  according  to  departments  as  explained  in 
Chapters  IV,  V  and  VI. 


INSTALLING    THE    SYSTEM  147 

(10)  Prepare  a  schedule  of  monthly  entries  for  the 
General  Journal,  as  outlined  in  Chapter  VII. 
Open  subsidiary  records  described  in  Chapter 
XL  The  form  of  Accounts  Receivable  Ledger 
will  depend  on  the  method  adopted  for  sales 
journalizing.  All  invoices  for  purchases  or  ex- 
penses, due  at  the  commencement  of  the  month, 
should  be  listed  in  the  Purchase  Journal  and 
a  detail  account  for  each  creditor  opened  as  ex- 
plained under  Accounts  Payable  Ledger  in 
ChapterXI. 

IV 

At  the  close  of  the  first  month's  business  that 
has  been  fully  recorded  as  outlined  in  the  three 
preceding  sections,  get  out  a  complete  set  of  mon- 
thly statistical  statements  as  described  in  Chapters 
XII  and  XIII  in  accordance  with  program  out- 
lined in  Chapter  XVI. 


CHAPTER  XV 
DAILY  PROGRAM 

THE  following  program  is  of  course  merely 
suggestive,  and  should  be  varied  to  suit  the 
convenience  of  the  bookkeeper  and  the  exi- 
gencies of  the  business.  It  is  intended  more  par- 
ticularly as  a  memorandum  of  what  should  be 
done  daily  in  keeping  up  the  various  accounting 
records.  It  is  strongly  recommended,  however, 
that  a  daily  program  suited  to  his  own  particular 
needs  be  made  up  by  each  bookkeeper  using  this 
system,  and  an  estimate  of  the  time  required  be 
put  on  each  item  of  the  work.  By  so  doing,  and 
endeavoring  to  keep  within  this  time  limit,  much 
greater  efficiency  will  be  attained  than  by  going 
about  the  work  entirely  at  haphazard. 

"The  day's  business",  and  similar  expressions 
in  this  program,  in  every  instance  refer  to  the 
operations  of  the  preceding  day  unless  otherwise 
specified. 

Cash 

(1)  Balance  the  preceding  day's  Cash,  and  make 
up  deposit  slip  for  the  cash  receipts,  leaving 
only  the  Imprest  Fund,  consisting  of  cash 
vouchers  and  balance,  in  the  Cash  Register  or 
drawer. 

148 


DAILY    PROGRAM  149 

(2)  Analyze  Cash  Sales,  and  set  aside  Analysis 
Slip  for  later  entry  in  the  Sales  Journal. 

(3)  Enter  cash   collections  from   Cash   Register 
tape  or  other  original  record  on  Cash  Re- 
ceived Journal,  if  such  entries  are  not  made 
immediately  upon  receipt  of  each  payment. 
Cash  Sales  should  be  entered  from  the  An- 
alysis Slip  as  a  total  for  the  day;  all  other 
receipts  itemized. 


Merchandise 

(4)  Enter  Merchandise  credits  on  Stock  Records 
from  Material  Requisition  slips,  at  the  same 
time  entering  costs  on  the  slips  from  the  Stock 
Record,   and  set  aside   the   Requisitions  for 
journalizing  or  billing  later. 

(5)  Enter  invoices  turned  in  by  the  store-keeper, 
covering  goods  received,  and  expense  invoices 
which  have  been  checked  as  correct,  in  the 
Purchase  Journal. 


Labor 

(6)  Enter  workmen's  time  on  Payroll  Sheet,  dis- 
tributing charges  to  department  labor  col- 
umns. 

Sales  Journalizing  or  Billing 

(  7  )  Journalize  the  day's  Cash,  Charge  and  Inter- 
department  sales,  if  the  Duplicate  Statement 
Method  is  used  (See  Chapter  IV).  If  the 
Duplicate  or  Triplicate  Billing  method  is  used 
the  sales  should  now  be  billed  from  the  Time 
Cards  and  Material  Requisitions,  with  the 
exception  of  the  Inter-department  Sales,  the 
original  records  of  which  are  to  be  filed  for 
preservation  until  the  end  of  the  month. 


150  PRACTICAL    GARAGE    ACCOUNTING 

Postings 

(8)  ACCOUNTS  RECEIVABLE  LEDGER: 
Post  the  day's  charges  from  the  Sales  Journal 
or  Posting  Copies  of  invoices.    Post  the  day's 
credits  from  the  Cash  Received  Journal.  Post 
any  adjusting  entries  from  the  General  Jour- 
nal. 

(9)  ACCOUNTS  PAYABLE  LEDGER:  Post 
charges  from  Cash  Paid  Journal.  Post  credits 
from  Purchase  Journal.     Post  any  adjusting 
entries  from  the  General  Journal. 

(10)  GENERAL  LEDGER:    Post  debits,  from 
General  Ledger  Sundry  column  of  Cash  Paid 
Journal,  and  from  the  Miscellaneous  column 
of  the  Purchase  Journal.     Post  credits  from 
the  General   Ledger   Sundry  column  of  the 
Cash  Receivable  Journal.    Post  General  Jour- 
nal adjusting  entries. 

Journals 

(11)  Payment  by  check  should  be  journalized  in 
the  Cash  Paid  Journal  before  or  immediately 
after  the  check  is  made  out  to  insure  that  the 
check  does  not  go  out  without  the  record  being 
made  of  it. 

(12)  The  Cash  Paid,  Cash  Received  and  Purchase 
Journals  should  be  frequently  footed  and  cross 
balanced,  always  when  the  foot  of  the  page  is 
reached,  in  order  that  there  shall  not  be  an 
unnecessary  accumulation  of  work  for  the  end 
of  the  month. 


CHAPTER  XVI 
MONTHLY  PROGRAM 

AS  in  the  case  of  the  daily  program  in  the  pre- 
ceding chapter  the  following  schedule  of 
the  bookkeeper's  monthly  duties  need  not 
be  followed  in  the  exact  order  presented.    But  it 
will  be  advisable,  at  any  rate  during  the  first  few 
months  the  system  is  in  operation,  for  the  book- 
keeper  to   make   a   copy   each   month   of   this 
program,  and  check  off  the  items  as  they  are  per- 
formed. 

(1)  Leave  bank  passbook  at  bank  when  making 
deposit  of  cash  receipts  for  the  last  day  of  the 
month,  for  balancing  of  book  and  return  of 
cancelled  checks. 

(2)  Render  Accounts  Receivable  Statements. 

(3)  Foot  columns  of  Cash  Received,  Cash  Paid, 
and   Purchase  Journals,  and  cross  foot  and 
balance  the  month's  totals. 

(4)  Verify  the  total  deposits  as  shown  in  the  de- 
posit column  of  the  Cash  Paid  Journal,  as 
equalling  the  total  cash  received  for  the  month 
as  shown  by  the  Cash  Received  Journal. 

(5)  Post  Cash  Received  Journal  entries  for  the 
month  to  the  General   Ledger,   as  follows: 
total  of  Accounts  Receivable  column  to  the 
credit  of  the  Accounts  Receivable  controlling 
account;   total   of   Discount  column   to   the 
debit  of  Discount  account;  total  of  Amount 

151 


152  PRACTICAL    GARAGE    ACCOUNTING 

Received  column  to  the  debit  of  Cash  in  Bank 
account  (Total  of  cash  sales  should  be 
posted  from  Sales  Journal  Summary  Sheet.) 

(6)  Post  Cash  Paid  Journal  entries  to  the  Gen- 
eral Ledger  as  follows:  total  of  Accounts 
Payable  column  to  the  debit  of  Accounts 
Payable  controlling  account ;  the  totals  of  the 
various  distribution  columns  to  the  debit  of 
accounts  specified  at  the  heading  of  the  col- 
umns; total  of  the  Discount  column  to  the 
credit  of  the  Discount  account;  the  total  of 
the  Amount  of  Check  column  to  the  credit  of 
Cash  in  Bank  account. 

(  7  )  Post  Purchase  Journal  totals  to  General  Led- 
ger as  follows :  total  of  each  purchase  column 
to  the  respective  Merchandise  Stock  account; 
total  of  the  total  column,  or  the  sum  of  all 
of  the  debit  columns,  to  the  credit  of  the  Ac- 
counts Payable  controlling  account. 

(8)  Bill   and    enter    Inter-department   sales    for 
month  as  shown  by  the  accumulated  Time 
Cards  and  Material  Requisition  slips.      (If 
there  are  a  large  number  of  these  Sales  they 
may  be  entered  on  a  separate  page  or  pages  of 
the  Sales  Journal,  or  billed  on  Form  17  weekly 
or  semi-monthly). 

(9)  Post  debit  for  Inter-department  Sales  to  In- 
side Expense  accounts  and  other  accounts  af- 
fected   from   the   Sales   Journal   or    Invoice 
binder. 

(10)  Make  up  Sales  Journal  Summary  Sheet  as 
described  in  Chapter  VI. 

(11)  Post  total  Sales  from  Sales  Journal,  or  from 
adding  machine  lists,  to  Sales  and  Inter-de- 
partment Sales  accounts. 

(12)  Verify  accuracy  of  cost  of  Productive  Labor, 
as  shown  by  Sales  Journal  cost  columns,  by 
comparison  with  total  of  Productive  Labor 
on  the  Payroll  sheets  for  the  month. 


MONTHLY  PROGRAM  153 

(13)  Make  monthly  journal  entries  covering  fixed 
charges,  as  per  schedule  in  the  General  Jour- 
nal, and  post  them  to  General  Ledger.  (These 
may  be  made  and  posted  sometime  during  the 
month  if  preferred.) 

(14)  Balance  Accounts  Receivable  ledger  with  con- 
trolling account  in  the  General  Ledger. 

(15)  Similarly  balance  Accounts  Payable  Ledger 
with  controlling  account. 

(16)  Balance   the   General   ledger   by   taking  off 
Trial  Balance  and  locating  any  discrepancies. 
Make  up  schedules  one  to  six  as  described  in 
Chapter  XIII. 

(17)  Draw  off  Comparative  Balance  Sheet  from 
the  General  ledger;  make  up  detailed  Com- 
parative   Expense    Statement    and    itemized 
Profit  and  Loss  statement ;  make  up  monthly 
Cost  Sheet;  all  as  described  in  Chapters  XII 
and  XIII. 


CHAPTER  XVII 
YEARLY  PROGRAM— CLOSING  BOOKS 

LOSING  the  books",  figuring  the  results  of 
the  year's  operations  and  drawing  up  state- 
ments exhibiting  these  results  for  the  infor- 
mation of  the  proprietor  or  Board  of  Directors,  is 
often  somewhat  of  a  bugbear  to  the  bookkeeper. 
Taken  in  conjunction  with  the  foregoing  instruc- 
tions, the  following  program  will  no  doubt  afford 
all  additional  assistance  needed  by  the  garage 
bookkeeper  to  satisfactorily  complete  the  year's 
records. 

( 1 )  Take  a  physical  inventory  of  each  merchandise 
stock,  viz.:  New  Cars,  Used  Cars,  General, 

Tires,  and  Gasoline  and  Oil,  valuing  the  items 
as  nearly  as  possible  at  cost,  unless  same  have 
become  shopworn  or  obsolete,  in  which  case  a 
suitable  reduction  should  be  made.  After  care- 
fully figuring  and  verifying  these  inventories, 

(2)  Correct  Stock  Record  cards  by  making  red  ink 
entries  on  each  one  on  which  the  balance  does 
not  agree  with  the  physical  inventory  of  that 
item;  specifying  in  the  entry  "Adjustment  to 
actual."    Adjust  General  Ledger  Merchandise 
Stock  accounts  to  agreement  with  total  of  physi- 
cal inventories  by  General  Journal  entry,  mak- 
ing the  contra  debit  or  credit  in  the  Cost  of 
Sales  or  the  Trading  account. 

154 


SUPPLEMENTARY  FORMS  155 

(3)  Check  over  Accounts  Receivable  and  Doubt- 
ful accounts  with  the  proprietor,  and  make  any 
adjustment  of  these  accounts  deemed  necessary 
by  transfers  to  Doubtful  accounts  or  to  Re- 
serve for  Bad  Debts ;  making  such  transfers  by 
General  Journal  entries. 

(4)  Compile   Compaq tive   Balance    Sheet    (com- 
paring the  assets,  liabilities  and  net  worth  ac- 
counts "before  closing"  with  the  same  items  at 
the  end  of  the  preceding  year),  also  detailed 
comparative  Profit  and  Loss  Statement  for  the 
year,  and  a  Cost  Sheet  covering  the  entire  year's 
business. 

(5)  Make  and  post  General  Journal  entries  closing 
Operating  accounts  into  Trading  account: — 
that  is,  charge  Trading  account  with  Cost  of 
Sales  and  Return  Goods  accounts,  if  such  are 
carried;  and  credit  Trading  account  with  the 
balance    of    Sales    account,    Inter-department 
Sales    account,    and    Miscellaneous    Sales    or 
Income  account. 

(6)  Make  and  post  journal  entry  transferring  bal- 
lance  of  Trading  account  representing  gross 
profit  on  operations,  to  Profit  and  Loss  account. 

(7)  Make  and  post  journal  entry  charging  Profit 
and  Loss  account  with  debit  balances  of  Garage 
Expense  accounts. 

(8)  Make  and  post  General  Journal  entries  trans- 
ferring to  Profit  and  Loss  account  balance  of 
Capital  Income  and  Expense  accounts. 

(9)  Make  and  post  entries  debiting  or  crediting 
balance  of  Profit  and  Loss  account  to  Surplus 
or  Deficit  account,  Dividend  account,  or  part- 
ners' Investment  accounts,  as  directed  by  the 
proprietor  or  Board  of  Directors. 


CHAPTER  XVII 
SUPPLEMENTARY  FORMS 

In  the  operation  of  any  growing  business  en- 
terprise the  necessity  wil  arise  from  time  to  time 
for  the  introduction  of  special  forms  and  records 
to  meet  particular  needs  as  they  develop.  Often 
the  result  is  that  successive  executives  or  book- 
keepers, adding  their  own  ideas  to  those  of  their 
predecessors,  build  up  an  accounting  system  that 
is  an  inharmonious  patchwork  of  the  more  or  less 
conflicting  ideas  of  many  minds,  and  that  in- 
volves much  duplication  of  work  and  loss  of 
time.  On  the  other  hand,  many  office  men  travel 
in  a  rut  and  waste  time  in  trying  to  adapt  out- 
grown forms  or  records  to  changing  conditions. 
These  opposite  extremes  of  undesirable  results 
but  emphasize  the  importance  of  adopting  a  sys- 
tem of  accounting  that  is  complete,  harmonious 
and  coherent,  hence  efficient;  and  of  having  it,  if 
possible,  installed  by  genuinely  expert  account- 
ing talent.  In  the  foregoing  pages  there  has  been 
described  such  an  acounting  system  for  the  aver- 
age garage;  but  in  some  cases  slight  alterations, 
as  for  instance  in  the  headings  of  the  Cash  Paid 

156 


SUPPLEMENTARY  FORMS  157 

or  Sales  Journal  columns,  will  make  these  forms 
better  suited  to  particular  cases ;  and  supplemen- 
tary forms  will  also  in  many  instances  be  found 
advantageous.  A  few  such  forms,  of  quite  gen- 
eral applicability,  are  illustrated  and  described 
in  this  chapter. 

Purchase  Order  and  Record  System 

In  all  but  the  smaller  garages  the  purchase  or- 
der and  recording  system  illustrated  in  Forms  26, 


JOSLYN  AUTOMOBILE  COMPANY 

ROCKFORD,  ILI^, 


•w  T«.»    *••  °'  T«»«»  '*>»..c«_ 

ORDER    N2     2499 

MESSRS. 


W.  »,ll  no,  b«  H»po».bte  lo,  .njr  (oodi  ct»fe 

»,lho«.  »  w,,n«  orde,  urot*H,  «ncd  Please  deliver  tO  be«fej_ 


And  charge  to 

JOSLYN  AUTOMOBILE  CO. 


Form  26— PURCHASE  ORDER 

Size  7l/2x7y2   inches,  in  duplicate. 


158 


PRACTICAL    GARAGE    ACCOUNTING 


27,  28,  and  29  will  be  found  especially  valuable. 
The  first,  Form  26,  is  a  Purhcase  Order,  printed 
in  duplicate:  the  original  after  being  filled  out 
is  to  be  handed  or  mailed  to  the  Company  from 
which  the  purchase  is  made;  the  duplicate  to 
remain  in  the  order-book  for  a  check  against  the 
invoice  for  the  goods  when  it  is  received.  The 
second,  Form  27,  should  also  be  printed  in  dup- 


MATER! 

Received 
Ou««{ 

M-  RECEIVED 

nf 

/.     fly 

«-""* 

..TKUT 

X&SS5SZ 

CO»T 

*ELUN« 

CMCCM 

Form  27— RECEIVING  CHECK-SHEET 

Size  85^x6  inches,  in  duplicate. 

licate  and  used  in  the  stock  room  for  the  purpose 
of  recording  the  receipt  of  materials  and  supplies 
ordered.  The  record  of  receipt  should  be  made 


SUPPLEMENTARY  FORMS  159 

on  this  form  without  reference  to  the  invoice 
covering  the  shipment,  in  order  that  the  count  of 
articles  received  may  not  be  influenced  by 
amounts  billed  by  the  shipper — a  most  natural 
tendency  in  hurried  checking  up  of  shipments 
received.  The  original,  after  the  entries  are 
made,  is  sent  to  the  office  to  be  there  attached  to 
the  invoice  covering  the  shipment.  The  invoice 
should  be  stamped  with  the  Purchase  Invoice 
Stamp  the  day  it  is  received  in  the  office,  and  filed 
temporarily  in  a  special  file.  When  the  receiving 
check-sheet  (Form  27)  covering  the  shipment 
comes  in  from  the  store-room  the  invoice  charge 
should  be  checked  against  the  record  of  receipt, 
the  invoice  calculations  verified,  the  proper  trade 
discount  deducted  (anything  over  two  percent 
for  cash  in  ten  days  is  a  trade  discount) ,  the  goods 

CHECKED  INTO  STOCK.. _BY. 

FOOTINGS  AND  EXTENSIONS  0.  K .. 

INVOICE  RECEIVED 
JUN181915 

ENTERED  STOCK  RECORD  BY 

ENTERED  PURCHASE  JNL.  FOL... 


APPROVED  FOR  PAYMENT. 


Form  28— PURCHASE  INVOICE  STAMP 

Actual  size. 


160 


PRACTICAL    GARAGE    ACCOUNTING 


entered  on  the  stock  record  unless  this  record  is 
made  in  the  store-room  from  the  receiving  slip, 
and  finally  the  invoice  entered  in  the  Purchase 
Journal.  Each  of  these  successive  operations 
should  be  noted  in  the  proper  space  provided  by 
the  Purchase  Invoice  Stamp  (Form  28).  The 
invoice  may  now  be  finally  filed. 


OOTE  »UI»CM*SCO 


Form  29— RETURNED  GOODS  TAG 

Size  4x10  inches 

Returned  Goods  Record 

Form  29  illustrates  an  especially  convenient 
combined  shipping  tag  and  card  record  of  goods 
returned  by  the  garage.  A  reference  to  the  illus- 
tration will  show  the  amount  of  important  infor- 
mation that  is  provided  for.  The  section  to  be 
torn  off  and  retained  in  the  stock  room  as  a  re- 
cord of  goods  returned  until  credit  memorandum 
has  been  received  is,  in  the  form  illustrated,  of  the 
exact  size  to  fit  a  stadard  4x6  file.  The  form  may 
be  contracted  to  fit  the  smaller  3x5  file  if  desired. 


SUPPLEMENTARY  FORMS  161 

The  Daily  Business  Statement 

As  has  already  been  stated,  one  of  the  princi- 
pal objects  kept  in  mind  in  designing  the  system 
of  garage  accounts  described  in  the  preceding 
pages  has  been  to  furnish  data  for  and  to  facili- 
tate the  compilation  of  statements  presenting  the 
results  of  the  operations  of  the  business  as  fully 
and  accurately  as  possible  at  the  end  of  each 
month.  To  compile  all  this  information  about 
the  business  daily  or  even  weekly  is  a  much  more 
difficult  proposition  and  the  advantages  gained 
are  not  at  all  commensurate  with  the  labor  in- 
volved. Great  claims  have  been  made  by  the 
manufacturers  of  certain  forms  of  journal  or 
combination  records  that  by  their  use  a  daily  bal- 
ance sheet  and  profit  and  loss  statement  could  be 
automatically  produced.  Concerning  such  re- 
cords Robert  H.  Montgomery,  C.  P.  A.,  the  fore- 
most American  authority  on  auditing,  says  in  his 
monumental  work  entitled  AUDITING,  THEORY 
AND  PRACTICE,  p.  308 : 

"Suppose  we  compare  present  conditions  with 
those  of  about  ten  years  ago.  At  that  time  sta- 
tionery houses,  which  carried  an  "auditing  de- 
partment" as  a  side  line,  were  making  a  great  stir 
through  advertising  and  traveling  solicitors,  and 
were  offering  to  produce  wonderful  results,  in- 
cluding daily  balance  sheets  and  profit  and  loss 


162  PRACTICAL    GARAGE    ACCOUNTING 

statements,  the  only  requirement  being  the  instal- 
lation of  their  patented  stationery.  Offices  were 
turned  inside  out  and  new  books  and  blanks  were 
installed  by  the  ton,  but  for  some  reason  the  ser- 
vice did  not  measure  up  to  the  promises,  and  hun- 
dreds of  offices  discarded  much  of  the  "junk" 
which  had  been  thrust  upon  them  and  went  back 
to  saner  methods." 

However,  nothing  in  the  foregoing  should  be 
understood  as  disparaging  the  value  to  the  execu- 
tive of  a  daily  statement  of  the  condition  of  the 
principal  asset  and  operating  accounts.  Some  of 
this  information  is  essential,  whether  compiled 
in  the  form  of  a  statement  or  not;  and  a  daily 
summary  statement  of  the  principal  business  op- 
erations, placed  regularly  before  the  managing 
head  of  the  business,  will  be  found  to  be  of  the 
greatest  interest  and  value  in  supplementing  the 
monthly  business  statements,  and  to  present  all 
the  information  of  any  real  value  that  would  be 
contained  in  a  supposedly  more  complete  daily 
balance  sheet  and  profit  and  loss  statement. 

A  form  for  such  a  daily  statement  is  presented 
herewith  (Form  30) .  It  may  be  easily  compiled 
from  the  Combination  Garage  Journal,  if  that 
record  is  kept  properly  up  to  date,  at  a  minimum 
of  labor  on  the  bookkeeper's  part.  It  will  be  noted 
that  the  form  summarizes  the  day's  operations 


SUPPLEMENTARY  FORMS 


'163 


DAILY  BUSINESS  NUMMARY- 

1*1 

CA 

AT  BEGINNING  OP  PAY     IN  BANK.     

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ACCOUNTS  RE.CEIIVABLEL         SHOP  EFFICIENCY 

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Form  30— DAILY  BUSINESS  SUMMARY 
inches 


164  PRACTICAL    GARAGB    ACCOUNTING 

under  four  headings :    Cash,  Sales,  Accounts  Re- 
ceivable and  Shop  Efficiency. 

The  information  contained  in  this  Daily  Bus- 
iness Summary  places  in  the  executive's  hands  in 
succinct  and  easily  grasped  form  all  the  essential 
facts  of  operations  and  of  actual  present  condi- 
tions of  the  business,  for  his  immediate  guidance 
and  for  study  in  comparison  with  the  preceding 
daily  reports,  which  should  be  retained  in  a  suit- 
able ring  binder  on  his  desk.  The  trend  of  the 
results  of  operations,  up  or  down,  in  comparison 
with  the  preceding  day's  and  month's  results  are 
here  easily  and  quickly  noted;  and  if  more  de- 
tailed information  of  expenditures,  sales,  collec- 
tions or  shop  efficiency  are  desired  it  may  be 
gained  from  an  inspection  of  the  journal  itself. 
Moreover,  the  information  can  not  be  given  him 
in  this  form  unless  the  books  are  kept  constantly 
up  to  date,  hence  this  statement  also  affords  an 
index  of  the  efficiency  o  f  the  accounting  depart- 
ment. 

Conclusion 

In  conclusion,  the  proprietor  or  manager  who 
receives  from  his  bookkeeper  each  day  the  Daily 
Business  Summary  as  illustrated  in  Form  30,  and 
at  the  end  of  each  month  the  four  monthly  busi- 
ness statements  illustrated  in  Forms  21,  22,  23  and 
24,  together  with  Form  25  if  a  Livery  department 


SUPPLEMENTARY  FORMS  165 

is  operated,  cannot  be  deceived  for  any  length  of 
time  concerning  the  condition  of  his  business,  or 
the  trend  of  the  results  of  its  operations,  either  by 
his  own  optimism,  by  a  superficial  appearance  of 
prosperity,  by  the  errors  or  dishonesty  of  clerks, 
or  otherwise.  His  business  becomes  more  and 
more  a  well  regulated  and  smoothly  working  ma- 
chine, and  decreasingly  that  which  all  business 
is  to  some  extent,  and  most  business  enterprises 
are  to  a  very  large  extent,  a  gamble. 

The  statements  enumerated  are  the  final  pro- 
duct of  a  scientifically  designed  and  co-ordinated 
system  of  accounts ;  and  as  the  manager  becomes 
familiar  with  the  information  supplied  and  pro- 
ficient in  sensing  its  significance  he  is  enabled  to 
quickly  recognize  varying  conditions  in  any  part 
of  his  business  machine,  and  in  proportion  to  his 
executive  ability  and  capacity  applies  the  knowl- 
edge so  gained  to  the  correction  of  undesirable 
conditions,  such  as  the  elimination  of  waste,  the 
stopping  of  leaks  and  the  application  of  stimu- 
lants when  necessary.  This  constant,  exact  knowl- 
edge gives  him  a  satisfaction  of  mind  and  an  as- 
surance and  certainty  of  action  that  places  his 
business  efforts  on  an  entirely  different  plane 
from  his  competitors'  who  do  not  use  the 
same  methods  of  modern  accounting  efficiency; 
and  other  conditions  being  equal,  insures  a  far 


166  PRACTICAL    GARAGE    ACCOUNTING 

greater  degree  of  stability  and  permanence  to  his 
business  structure  than  is  possible  in  one  less  in- 
telligently directed.  For  the  advantages  of  scien- 
tific accounting,  in  all  that  the  expression  implies, 
are  but  a  modern  exemplification  of  the  wisdom 
of  the  ancient  Greek  who  declared,  twenty  odd 
centuries  ago, 

"KNOWLEDGE  IS  POWER/' 


INDEX 

(References  are  to  Pages) 
ACCOUNTING, 

By   Machines   19 

Defined,  _.._ _ 16 

Four  Stages,  17 

Modern   Methods,   _ ^ 17-19 

Obsolete  Methods,  16 

ACCOUNTS  PAYABLE  ACCOUNT, ,...„ „ _ 97 

ACCOUNTS  PAYABLE  LEDGER, „ „ 114 

ACCOUNTS  RECEIVABLE  ACCOUNT  ,. 86 

ACCOUNTS  RECEIVABLE  LEDGER 112 

ACCRUED  FUTURE  DUE  ACCOUNTS  „ _ 99 

ACCRUED  INTEREST  ON  NOTES  PAYABLE 99 

ACCRUED  INTEREST  ON  NOTES  RECEIVABLE ^ _ 89 

ACCRUED  INTEREST  ON  REAL  ESTATE  MORTGAGES  96 

ADMINISTRATIVE  EXPENSE  ACCOUNTS _ 108,  136 

ADMINISTRATIVE  SALARIES  + _ _ 108 

ADVANTAGES  OF  COST  SYSTEM  OF  ACCOUNTING _.11-14,  164 

ADVANTAGES  OF  PERPETUAL  INVENTORY _.. 116 

ADVERTISING,  GENERAL _ ....108 

ALLOWANCES  TO  CUSTOMERS 103 

ASSETS,  CLASSIFICATION  IN  LEDGER  82 

BAD  DEBT  LOSSES  * 79 

BALANCE  SHEET,  THE 

Description    ,. 120 

Form    21    122-123 

BANK,  CHECKING  ACCOUNT  „ _^. 36,  84 

BATTERY  DEPARTMENT  EXPENSE  107 

BATTERY  INSIDE  EXPENSE  „ 107 

CAPITAL  INCOME  AND  EXPENSE  ACCOUNTS  109 

CAPITAL  STOCK  ACCOUNT  _ _ 100 

CAR  REPAIR  DEPARTMENT  EXPENSE  * 107 

CAR  REPAIR  DEPARTMENT  INSIDE  EXPENSE 107 

CASH  IN  BANK  ACCOUNT * .._ 84 

Reconciliation  with  Bank's  Account  84 

CASH  PAID  JOURNAL, 

Description,     _ 33 

Form    7    _ ^ _ 34 

CASH  RECEIVED  JOURNAL, 

Description    31 

Form  6  32 

CASH  RECEIVED,  METHOD  OF  HANDLING,  ... _ 27 

CASH   REGISTER   ^ 20 

CASH  SALES,  ANALYSIS  OF _ 72 

CHART  OF  GARAGE  COST  SYSTEM  10 

167 


168  INDEX 

(References  are  to  Pages) 

CLASSIFICATION  OF  GENERAL  LEDGER  ACCOUNTS, 

Assets     82 

Liabilities    - _ 97 

Net  Worth  100 

CLOSING  BOOKS,  PROGRAM  FOR  .- 154 

COMBINATION   JOURNAL 31 

COMPARATIVE  BALANCE  SHEET,  MONTHLY  „ _ _*...120 

COMPARATIVE  OPERATING  EXPENSE  STATEMENT, 

Description   ~ .121 

Form  22  _ - - _ 124 

CONTROLLING  ACCOUNTS  _ 86,  112 

COST  ACCOUNTING  IN  GARAGE, 

Objections   answered   ..._ _ 14 

Various  methods  _ — 43 

What  it  accomplishes ~ —.. 12,  13 

Why  needed  ~ _ - - ~ * 11,  12 

COST  OF  SALES  ACCOUNT  _ ~ „ _ ...104 

COST  SHEET,  MONTHLY „ „ 429 

CREDIT  AND  COLLECTION  EXPENSE _ «. 108 

CREDITS, 

On  accounts  payable  _ - .41 

On  accounts  receivable  103 

DAILY  CASH  SALES  SUMMARY 

Description    _ _ 21 

Form  2  . - - _...-. 21 

DAY  BOOK,  MODERN ^ _ 17 

DEPARTMENTAL  COST  SHEET _* 129 

(See  "Monthly  Cost  Sheet") 

DEPARTMENTS  OF  GARAGE 52 

DEPOSITS  ON  NEW  CARS, 

By  Customers  _ 98 

By    Sub- Agents    _ 98 

With  Manufacturers    _ ~ - _ *.88 

DEPRECIATION  * _ 78,  107 

On  Real  Estate 96 

DETAIL  LEDGERS  - * — 112 

DIRECT  OPERATING  EXPENSES - 135 

DISCOUNT  ~ - 1 1 0 

DISHONESTY  OF  EMPLOYEES,  COST  ACCOUNTING  A  CHECK  ON 13 

DOUBTFUL  ACCOUNTS  RECEIVABLE  _ „ +...87 

DUPLICATE  BILLING  METHOD, 

Description   _ 57 

Form  15  58-59 

Form  16 60 

DUPLICATE  STATEMENT  METHOD, 

Description    52 

Form    13    — _ + 54-55 

Form    14   - - 56 

ENTRY  OF  MONTHLY  EXPENSE  ACCRUALS  — 80 


INDEX  169 

(References  are  to  Pages) 

EQUIPMENT  ACCOUNTS  . 95 

ESTIMATED  BAD  DEBT  Loss _..„ 108 

EXPENSE  ACCOUNTS,  CLASSIFICATION  OF ...133 

FIRE  INSURANCE  _ _+ 78 

FORMS, 

Cash   Received   Journal   32 

Cash  Paid  (Imprest  Fund)  Voucher  ..._ 38 

Cash    Paid    Journal    _ _....* 34 

Comparative  Balance  Sheet  _ 122-123 

Comparative  Operating  Expense  Statement  124 

Daily  Business  Summary ^ „ 163 

Daily  Cash  Sales  Summary  _ „ .21 

Duplicate  Statement  Ledger,  Cost  Finding  Form  „ 54-55 

Duplcate  Statement  Ledger,  Ordinary  Form 56 

Duplicate  Billing  _..„ „*. ...58-59 

Duplicate  Billing,  Optional  Form  _ 60 

General  Journal  „ *. 76 

Inter-department   Billing   64 

Livery  Trip  Ticket  — „ _ _ .». 28 

Material   Requisition   „ 18 

Monthly  Profit  and  Loss  Statement  125 

Monthly  Departmental  Cost  Sheet  126-127 

Monthly  Livery  Department  Profit  and  Loss  Statement _...143 

Payroll   Distribution  Journal    _ .....46 

Purchase  Invoice  Stamp  _ 159 

Purchase  Journal   _ _ 40 

Purchase  Order  _ *._ 157 

Receiving  Check  Sheet  „ 158 

Returned  Goods  Tag  _ * 160 

Sales  Journal,  Labor  Departments  _ — 50 

Sales  Journal,  Merchandise  Departments  . — 51 

Stock  Record  Card  ,. 115 

Time   Card  „ _ 22-23 

Transient  Storage  Tag  _ _ 26 

FREE   SERVICE  _ 108 

FUEL  ACCOUNT  + 90 

GASOLINE  DEPARTMENT  EXPENSE  + 107 

GASOLINE  DEPARTMENT  INSIDE  EXPENSE  .„ _ „ 107 

GASOLINE  STOCK  * _ „ 94 

GENERAL  EXPENSE  + 1 08 

GENERAL  JOURNAL „ 47,  75 

Form  18  „ _ 76 

GENERAL  LEDGER  ^. 82 

GENERAL  STOCK  _ _ 93 

GENERAL  STOCK  ROOM  EXPENSE  ..... 66,  107,  140 

GENERAL  STOCK  ROOM  INSIDE  EXPENSE „... + 107 

GENERAL  STOCK  SALES  INSIDE  EXPENSE - 107 

GUARANTEE  DEPOSITS  WITH  MANUFACTURERS  _ > 88 

HEAT  ACCOUNT  ..  ....106 


1 70  INDEX 

(References  are  to  Pages) 

HOUSE  EXPENSE  ACCOUNTS .....106,  133 

INBOUND  FREIGHT — GENERAL  SOCK  107 

INBOUND  FREIGHT — TIRE  STOCK  * 107 

INSIDE  EXPENSE  ACCOUNTS 68 

INSURANCE  107 

INTERDEPARTMENT  SALES  ACCOUNT : * _ 103 

INTER-DEPARTMENT  SALES, 

By  Battery  Department  68 

By  Car  Repair  Department  67 

By  Live  Storage  Department  » 67 

By  Paint  Shop  68 

By  Tire  Repair  Department  68 

Credits  65 

Distinct  from  Non-productive  Labor  68 

Form  17  ..._ _ - * 64 

To  Free  Service  68 

To  Inside  Expense  _ + 68 

To  Maintenance  of  Buildings  69 

To  Real  Estate * 69 

To  Used  Car  Stock 69 

INTEREST  ACCOUNT „ 110 

INTEREST  ON  DEPARTMENTAL  INVESTMENT ,141 

INTRODUCTORY  „ 11 

INSTALLING  AN  ACCOUNTING  SYSTEM,  BEST  WAY 144 

Progressive  Installation  145 

IMPREST  FUND _ * 37,  85 

Reimbursement  of  39 

Voucher,  Form  8,  - 3  8 

INVESTMENT  ACCOUNTS,  PARTNERS' „ 100 

INVESTMENT  EXPENSE  ACCOUNTS  _ .. 107,  133 

JOURNALIZING,  Six  SUBDIVISIONS  OF ,. 30 

JOURNALS, 

Cash    Paid _.. 33 

Cash    Received    31 

Combination    31 

General    + 47 

Modern    30 

Payroll    Distribution 47 

Purchase * 41 

Sales  - 45 

Six   Subdivisions   31 

LABOR, 

Charges  for,  how  made  70 

Errors  in  Charging,  how  to  detect  * 74 

Non-Productive    107 

Productive  - ,. 104 

LABOR  DEPARTMENTS,  LIST  OF * 70 

LABOR  OVERHEAD  ..  140 


INDEX  171 

(References  are  to  Pages) 

LEAKS,  How  TO  LOCATE ^ 12 

LEDGER, 

Accounts  Payable  114 

Accounts    Receivable    , 86 

Detail  112 

General    82 

LIABILITY  INSURANCE * ~ 107 

LIABILITIES,  LEDGER  CLASSIFICATION  OF 97 

LIENS  OR  FIXED  LIABILITIES «. 99 

LIGHT  ACCOUNT 106 

LIVE  STORAGE  DEPARTMENT  EXPENSE 107 

LIVE  STORAGE  DEPARTMENT  INSIDE  EXPENSE ,....107 

LIVERY  CAR  DETAIL  RECORD 117 

LIVERY  DEPARTMENT  EXPENSE 107 

LIVERY  DEPARTMENT  INSIDE  EXPENSE  107 

LIVERY  DEPARTMENT  MONTHLY  OPERATING  STATEMENT 142 

Form   25    + .....143 

LIVERY  TRIP  TICKET  27 

Form    5    < 28 

LOSSES  ON  ACCOUNTS  OR  NOTES  RECEIVABLE  .* _ 102 

MATERIAL   REQUISITION    _ „ _ 19 

Form    1    ..18 

MERCHANDISE  ACCOUNTS  „ 91 

MERCHANDISE  SALES  DEPARTMENTS,  LIST  OF _ _ 71 

METHODS  OF  DISTRIBUTION  OF  OVERHEAD  EXPENSE 137 

MISCELLANEOUS  CHARGES  TO  CUSTOMERS  ~ 86 

MISCELLANEOUS  SALES _ 72,  141 

MODERN  "DAY  BOOK"  THE „ 17 

MONTHLY  COST  SHEET, 

Description    _ 129 

Form  24  ~ + 126-127 

MONTHLY  ENTRIES  IN  THE  GENERAL  JOURNAL _ 75 

MONTHLY  PROGRAM  151 

MONTHLY  STATISTICS,  THE „ _ 119 

MORTGAGES  ON  REAL  ESTATE  „ * 96 

NET  WORTH  84,  100 

NEW  CAR  DEPARTMENT  EXPENSE ...107 

NEW  CAR  DEPARTMENT  INSIDE  EXPENSE  _ L 107 

NEW  CAR  STOCK  ACCOUNT 91 

NON-PRODUCTIVE  LABOR  107 

NOTES  PAYABLE  98 

NOTES  PAYABLE  AND  RECEIVABLE  BOOK — , 117 

NOTES  RECEIVABLE  89 

OFFICE  EXPENSE  _ ...>. _ 108 

OFFICE  FURNITURE  AND  FIXTURES  _ _ 95 

OFFICE  SALARIES  108 

OFFICERS'  ACCOUNTS  * 98 

OPERATING  ACCOUNTS  102 

OPERATING  EXPENSE  ACCOUNTS  ...  ....107 


172  INDEX 

(References  are  to  Pages) 
OVERHEAD  EXPENSE, 

Departmental  distribution  of  130,  136 

Subdivisions   of  ^ _ 132 

PAINT  SHOP  EXPENSE _ 107 

PAINT  SHOP  INSIDE  EXPENSE „ 108 

PARTNERS'  INVESTMENT  ACCOUNTS  100 

PARTS  AND  ACCESSORIES  STOCK * j. 93 

PAYROLL _ 81,  97 

PAYROLL  DISTRIBUTION  JOURNAL, 

Description   _ „ 47 

Form    10    _ * _ „ 46 

PERPETUAL  INVENTORY  _ 114 

POWER _ * 107 

PREFACE  „ _ 7 

PREPAID  INSURANCE  * _ 90 

PRIMARY  RECORDS  _ 16,  29 

PRODUCTIVE  LABOR  J.04 

PROFIT  AND  Loss  ACCOUNT  ...- _ —101 

PROFIT  AND  Loss  STATEMENT,  MONTHLY, 

Description   _ _ 128 

Form  23  _* _ 125 

PROFITS  OR  LOSSES,  UNUSUAL _ 102 

PURCHASE  JOURNAL, 

Description    , _ 41 

Form   9    * _ ~ 40 

PURCHASE  ORDER  AND  RECORD  SYSTEM 157 

PURCHASES  ON  ACCOUNT  - 41 

REAL  ESTATE  - 95 

RECONCILIATION  OF  BANK  ACCOUNT  ._ _ _ 84 

RENT  ACCOUNT ~ 106 

RENT  CHARGES, 

How  made - - 75 

Proper  rate  _ - •• 76 

REPRESENTATIVE  ACCOUNTS — - 86 

RESERVE  FOR  BAD  DEBTS  «. _ 87 

RESERVE  FOR  DEPRECIATION, 

On  Equipment  - — 95 

On  Office  Furniture  and  Fixtures  _ * 95 

On  Real  Estate - -95 

On  Service  Cars  *— - 95 

On  Used  Cars _ - - 93 

RESERVE  FOR  TAXES  * - - 99 

RETURNED  GOODS  RECORD, 

Description   + — - 160 

Form  29  ..._ 160 

SALARIES,  MONTHLY,  CREDIT  OF  OFFICERS 79 

SALES  ACCOUNT  102 

SALES  DISTRIBUTION  AND  BILLING _ _ - - 48 

Optional  Methods 52 


INDEX  173 

(References  are  to  Pages) 
SALES  JOURNAL, 

Description   . ........ _. _... ..........48 

Forms  11  and  12  ...- 50,  51 

Summary     _ _ 73 

SALES  JOURNALIZING 70 

SALESMEN'S  SALARIES  AND  COMMISSIONS  ...* ...108 

SECOND  HAND  AUTOMOBILES  (See  Used  Cars] 

SELLING  EXPENSE  ACCOUNT _ 108,  138 

SERVICE  CAR  ACCOUNT _ 95 

SERVICE  CAR  EXPENSE  108 

STATISTICAL  ACCOUNTS 110 

STOCK  RECORD  CARD,  DESCRIPTION -.114 

Form  19  115 

Form  20  _* ~  115 

STORAGE  REGISTER _ 25 

SUB-AGENTS'  DEPOSITS _ ~ 98 

SUBSIDIARY  RECORDS  „ 112 

SUPPLEMENTARY  FORMS 156 

SURPLUS  ACCOUNT  *.._ „ 101 

TABLE  OF  CONTENTS _ 5 

TAXES _ 77,  107 

TIME  CARD, 

Description   24 

Form  3  _ * - _ 22,  23 

TIME-STAMP,  VALUE  OF „ 24 

TIRE  REPAIR  DEPARTMENT  INSIDE  EXPENSE  ...* 107 

TIRE  REPAIR  DEPARTMENT  EXPENSE _ -.107 

TIRE  STOCK  DEPARTMENT  EXPENSE „ 107 

TIRE  STOCK  DEPARTMENT  INSIDE  EXPENSE  .^.... 107 

TRADING  ACCOUNT .. 110 

TRANSIENT  STORAGE  TAG, 

Description    26 

Form  4  _„. 26 

TRIAL  BALANCE  *.._ - 121 

TRIPLICATE  BILLING  METHOD 61 

USED  CAR  DEPARTMENT  EXPENSE „ .. 107 

USED  CAR  DEPARTMENT  INSIDE  EXPENSE  .+ 107 

USED  CAR  STOCK _ 92 

USED  CAR  STOCK  RECORD „ 117 

VOUCHER  SYSTEM,  THE „ ._ _ _. 42 

Comparative  merit  of  „ „ * .43 

Modification  of  ..... 44 

WASH  RACK  EXPENSE  _ 107 

WASH  RACK  INSIDE  EXPENSE _ _ 107 

WASTED  EFFORTS  AND  RECORDS  IN  ACCOUNTING 119 

WISDOM  OF  THE  ANCIENTS  APPROVES  COST  SYSTEM » 166 

YEARLY  PROGRAM  FOR  CLOSING  BOOKS  ...  154 


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A  Few  of  Our  Accounting  Specialties  that 
SIMPLIFY  GARAGE  ACCOUNTING 

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Time  Stamps  Duplicate  Order  Blanks 

Stock  Record  Cards  Duplicate  Billing  Forms 

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Loose  Leaf  Record  Sheets  for : 

Duplicate  Statement  System 

Ledgers— General  and  Customers' 

Cash  Received  Journal        Cash  Paid  Journal 

Purchase  Journal  Sales  Journal 

Pay  Roll  Distribution          General  Journal 

We  have  all  the  forms  described  and  illustrated  in 

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The 

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A  BLANK  BOOK  with  full  instructions,  easy  to 
fill  out,  so  that  any  garage  owner  can  figure  his  Profit 
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CAN  BE  USED  WITH  ANY  SYSTEM  of 
Bookkeeping,  in  any  garage,  large  or  small.  It  is 

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Rockford,  Illinois 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.OO  ON  THE  SEVENTH  DAY 
OVERDUE. 


J-tB  13  1939 


APR   ft     1939 


LD  21-95m-7,'3i; 


358846 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


